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Strategic choice of preferences: the persona model

Author

Listed:
  • Michael Harre
  • Julian Jamison
  • David Newth
  • David H. Wolpert
Abstract
We introduce a modification to the two-timescale games studied in the evolution of preferences (EOP) literature. In this modification, the strategic process occurring on the long timescale is learning by an individual across his or her lifetime, not natural selection operating on genomes over multiple generations. This change to the longer timescale removes many of the formal difficulties of EOP models and allows us to show how two-timescale games can provide endogenous explanations for why humans sometimes adopt interdependent preferences and sometimes exhibit logit quantal response functions. In particular, we show that our modification to EOP explains experimental data in the Traveler?s Dilemma. We also use our modification to show how cooperation can arise in nonrepeated versions of the Prisoner?s Dilemma (PD). We then show that our modification to EOP predicts a ?crowding out? phenomenon in the PD, in which introducing incentives to cooperate causes players to stop cooperating instead. We also use our modification to predict a tradeoff between the robustness and the benefit of cooperation in the PD.

Suggested Citation

  • Michael Harre & Julian Jamison & David Newth & David H. Wolpert, 2010. "Strategic choice of preferences: the persona model," Working Papers 10-10, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:10-10
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    References listed on IDEAS

    as
    1. De Long, J Bradford & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, 1990. "Noise Trader Risk in Financial Markets," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 703-738, August.
    2. Ed Hopkins, 2002. "Two Competing Models of How People Learn in Games," Econometrica, Econometric Society, vol. 70(6), pages 2141-2166, November.
    3. Sven Widekind, 2008. "Evolution of Non-Expected Utility Preferences," Lecture Notes in Economics and Mathematical Systems, Springer, number 978-3-540-76845-6, October.
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