Princeton University Press eBooks· 2011· Book chapter
Incorporating Fairness into Game Theory and Economics
- 4,421citations
- 2011year
Short summary
Fairness equilibria, which incorporate preferences for helping/hurting others based on their actions, encompass all mutual-max (helping) and mutual-min (hurting) Nash equilibria.
AI-generated from the title and abstract; the full text is not read.
Key points
- Fairness equilibria capture reciprocal preferences: helping those who help you, hurting those who hurt you.
- All mutual-max and mutual-min Nash equilibria are shown to be fairness equilibria.
- The relationship between fairness, mutual-max/min, and Nash equilibria depends on the magnitude of payoffs.
- Economic examples and welfare implications of fairness are explored.
AI-generated from the title and abstract; the full text is not read.
Abstract
People like to help those who are helping them and to hurt those who are hurting them. Outcomes rejecting such motivations are called fairness equilibria. Outcomes are mutual-max when each person maximizes the other's material payoffs, and mutual-min when each person minimizes the other's payoffs. It is shown that every mutual-max or mutual-min Nash equilibrium is a fairness equilibrium. If payoffs are small, fairness equilibria are roughly the set of mutual-max and mutual-min outcomes; if payoffs are large, fairness equilibria are roughly the set of Nash equilibria. Several economic examples are considered and possible welfare implications of fairness are explored. Copyright 1993 by American Economic Association.
The authors' abstract, as published at the source. Princeton University Press eBooks, 2011 · DOI ↗
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