Equilibrium Vengeance

Daniel Friedman and Nirvikar Singh

No 766, CESifo Working Paper Series from CESifo

Abstract: This paper introduces two ideas, emotional state dependent utility components (ESDUCs), and evolutionary perfect Bayesian equilibrium (EPBE). Using a simple extensive form game, we illustrate the efficiency-enhancing role of a powerful ESDUC, the vengeance motive. Incorporating behavioral noise and observational noise leads to a range of (short run) Perfect Bayesian equilibria (PBE) involving both vengeful and non-vengeful types. We then derive two (long run) EPBE, one where both types survive and reap mutual gains, and a second where only the non-vengeful type survives and there are no mutual gains.

Keywords: negative reciprocity; perfect Bayesian equilibrium; evolutionary perfect Bayesian equilibrium; emotional state dependent utility (search for similar items in EconPapers)
JEL-codes: B52 C73 D64 Z13 (search for similar items in EconPapers)
Date: 2002
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Related works:
Journal Article: Equilibrium vengeance (2009)
Working Paper: Equilibrium Vengeance (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_766

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