Tit for Tat: Foundations of Preferences for Reciprocity in Strategic Settings

Uzi Segal and Joel Sobel

No 9917, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: This paper assumes that in addition to the conventional (selfish) preferences over outcomes, players in a strategic environment have preferences over strategies. In the context of two-player games, it provides conditions under which a player's preferences over strategies can be represented as a weighted average of the individual's selfish payoffs and the selfish payoffs of the opponent. The weight one player places on the opponent's selfish utility depends on the opponent's behavior. In this way, the framework is rich enough to describe the behavior of individuals who repay kindness with kindness and meanness with meanness. The paper assumes that each player has an ordering over his opponent's strategies that describes the niceness of these strategies. It introduces a condition that insures that the weight on opponent's utility increases if and only if the opponent chooses a nicer strategy.

Date: 1999
New Economics Papers: this item is included in nep-cdm
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Related works:
Journal Article: Tit for tat: Foundations of preferences for reciprocity in strategic settings (2007)
Working Paper: Tit for Tat: Foundations of Preferences for Reciprocity in Strategic Settings (1999)
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