Representing others' preferences in mixed motive games: was Schelling right?

Devetag, Giovanna and Warglien, Massimo (2002) Representing others' preferences in mixed motive games: was Schelling right? UNSPECIFIED. (Unpublished)

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    The available experimental evidence suggests that even two-person normal form games with an elementary action space present substantial degrees of cognitive difficulty. We submit that the relational structure of the players' preferences is a source of complexity of a game. We provide a formal classication of order structures in two-person normal form games, based on the two properties of monotonicity and projectivity, and present an experiment on individual ability to construct a representation of bi-ordered sets isomorphic to the preference structure of paradigmatic normal form games. Experimental results support the hypothesis that relational complexity matters. In particular, they support Schelling's intuition that `mixed motive games' are harder to represent than `pure motive' ones. In addition, the experiment shows that most subjects tend to perceive and extract monotonic relations from non-projective ones. We show that individuals' short term memory capacity limitations signicantly affect their ability to correctly represent bi-orders. Some connections with Rubinstein's analysis of binary relations in natural language are also shortly discussed. JEL codes: C70, C72

    Item Type: Departmental Technical Report
    Department or Research center: CEEL (Computable and Experimental Economics Laboratory)
    Subjects: Q Science > QA Mathematics > QA269 Game theory
    H Social Sciences > HB Economic Theory
    Uncontrolled Keywords: pure motive - mixed motive - preferences - bi-orders language - cognition - pro-jectivity - monotonicity - short term memory - experiments
    Report Number: 8
    Repository staff approval on: 19 Jan 2011

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