An indirect evolutionary justification of risk neutral bidding in fair division games

Werner Güth () and Paul Pezanis-Christou
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Werner Güth: Max Planck Institute for Research on Collective Goods

International Journal of Game Theory, 2021, vol. 50, issue 1, No 4, 63-74

Abstract: Abstract We justify risk neutral equilibrium bidding in commonly known fair division games with incomplete information by an evolutionary setup postulating (i) minimal common knowledge, (ii) optimal responses to conjectural beliefs how others behave and (iii) evolutionary selection of conjectural beliefs with fitness measured by expected payoffs. After justifying the game forms we derive the evolutionary games for first- and second-price fair division and determine the evolutionarily stable conjectures. The latter coincide with equilibrium bidding, irrespectively of the number of bidders, i.e., heuristic belief adaptation can imply the same bidding behavior as equilibrium analysis based on common knowledge and counterfactual bidding.

Keywords: Fair division; Evolutionary stable strategies; Risk neutrality (search for similar items in EconPapers)
Date: 2021
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Working Paper: An indirect evolutionary justification of risk neutral bidding in fair division games (2018)
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DOI: 10.1007/s00182-020-00739-9

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