Evolutionary stability in a reputational model of bargaining

Dilip Abreu, Rajiv Sethi

    Research output: Contribution to journalArticle

    Abstract

    A large and growing literature on reputation in games builds on the insight that the possibility of one or more players being boundedly rational can have significant effects on equilibrium behavior. This literature leaves unexplained the presence of behavioral players in the first place, as well as the particular forms of irrationality assumed and the population shares of the various types. In this paper we endogenize departures from rationality on the basis of an evolutionary stability criterion, under the assumption that rational players incur a cost which reflects the greater sophistication of their behavior. This cost may be arbitrarily small. Within the context of a reputational model of bargaining, we show that evolutionary stability necessitates the presence of behavioral players. It also places significant joint restrictions on the set of behavioral types that can coexist, their respective population shares, and the long run population share of rational players.

    Original languageEnglish (US)
    Pages (from-to)195-216
    Number of pages22
    JournalGames and Economic Behavior
    Volume44
    Issue number2
    DOIs
    StatePublished - 2003

    Fingerprint

    Evolutionary stability
    Costs
    Irrationality
    Rationality
    Sophistication

    Keywords

    • Bargaining
    • Behavioral types
    • Evolution
    • Reputation

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics

    Cite this

    Evolutionary stability in a reputational model of bargaining. / Abreu, Dilip; Sethi, Rajiv.

    In: Games and Economic Behavior, Vol. 44, No. 2, 2003, p. 195-216.

    Research output: Contribution to journalArticle

    Abreu, Dilip ; Sethi, Rajiv. / Evolutionary stability in a reputational model of bargaining. In: Games and Economic Behavior. 2003 ; Vol. 44, No. 2. pp. 195-216.
    @article{986c623df36a4d5086e11d4a38686409,
    title = "Evolutionary stability in a reputational model of bargaining",
    abstract = "A large and growing literature on reputation in games builds on the insight that the possibility of one or more players being boundedly rational can have significant effects on equilibrium behavior. This literature leaves unexplained the presence of behavioral players in the first place, as well as the particular forms of irrationality assumed and the population shares of the various types. In this paper we endogenize departures from rationality on the basis of an evolutionary stability criterion, under the assumption that rational players incur a cost which reflects the greater sophistication of their behavior. This cost may be arbitrarily small. Within the context of a reputational model of bargaining, we show that evolutionary stability necessitates the presence of behavioral players. It also places significant joint restrictions on the set of behavioral types that can coexist, their respective population shares, and the long run population share of rational players.",
    keywords = "Bargaining, Behavioral types, Evolution, Reputation",
    author = "Dilip Abreu and Rajiv Sethi",
    year = "2003",
    doi = "10.1016/S0899-8256(03)00029-0",
    language = "English (US)",
    volume = "44",
    pages = "195--216",
    journal = "Games and Economic Behavior",
    issn = "0899-8256",
    publisher = "Academic Press Inc.",
    number = "2",

    }

    TY - JOUR

    T1 - Evolutionary stability in a reputational model of bargaining

    AU - Abreu, Dilip

    AU - Sethi, Rajiv

    PY - 2003

    Y1 - 2003

    N2 - A large and growing literature on reputation in games builds on the insight that the possibility of one or more players being boundedly rational can have significant effects on equilibrium behavior. This literature leaves unexplained the presence of behavioral players in the first place, as well as the particular forms of irrationality assumed and the population shares of the various types. In this paper we endogenize departures from rationality on the basis of an evolutionary stability criterion, under the assumption that rational players incur a cost which reflects the greater sophistication of their behavior. This cost may be arbitrarily small. Within the context of a reputational model of bargaining, we show that evolutionary stability necessitates the presence of behavioral players. It also places significant joint restrictions on the set of behavioral types that can coexist, their respective population shares, and the long run population share of rational players.

    AB - A large and growing literature on reputation in games builds on the insight that the possibility of one or more players being boundedly rational can have significant effects on equilibrium behavior. This literature leaves unexplained the presence of behavioral players in the first place, as well as the particular forms of irrationality assumed and the population shares of the various types. In this paper we endogenize departures from rationality on the basis of an evolutionary stability criterion, under the assumption that rational players incur a cost which reflects the greater sophistication of their behavior. This cost may be arbitrarily small. Within the context of a reputational model of bargaining, we show that evolutionary stability necessitates the presence of behavioral players. It also places significant joint restrictions on the set of behavioral types that can coexist, their respective population shares, and the long run population share of rational players.

    KW - Bargaining

    KW - Behavioral types

    KW - Evolution

    KW - Reputation

    UR - http://www.scopus.com/inward/record.url?scp=0042659374&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=0042659374&partnerID=8YFLogxK

    U2 - 10.1016/S0899-8256(03)00029-0

    DO - 10.1016/S0899-8256(03)00029-0

    M3 - Article

    AN - SCOPUS:0042659374

    VL - 44

    SP - 195

    EP - 216

    JO - Games and Economic Behavior

    JF - Games and Economic Behavior

    SN - 0899-8256

    IS - 2

    ER -