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Nonparametric utility theory in strategic settings: Revealing preferences and beliefs from proposal–response games

Castillo, Marco E and Cross, Philip J and Freer, Mikhail (2019) 'Nonparametric utility theory in strategic settings: Revealing preferences and beliefs from proposal–response games.' Games and Economic Behavior, 115. 60 - 82. ISSN 0899-8256

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Abstract

We explore the conditions under which behavior in a strategic setting can be rationalized as the best response to some belief about other players' behavior. We show that a restriction on preferences, which we term quasi-monotonicity, provides such a test for a family of ultimatum games. Preferences are quasi-monotone if an agent prefers an allocation that improves her payoff at least as much as that of others. In an experiment, we find that 94% of the proposers make choices that are arbitrarily close to quasi-monotone preferences and beliefs. We also find that 90% of the responders make inconsistent choices in no more than 5% of the decision problems. Subjects whose choices are consistent as proposers are also more likely to make consistent choices as responders and to believe that others act consistently. Finally, we find little support for the convexity of preferences.

Item Type: Article
Uncontrolled Keywords: Noncooperative games, Rationality, Beliefs
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 19 Sep 2019 09:27
Last Modified: 15 Aug 2020 01:00
URI: http://repository.essex.ac.uk/id/eprint/25352

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