Conventional Contracts, Intentional Behavior and Logit Choice: Equality Without Symmetry

36 Pages Posted: 8 Nov 2017  

Sung-Ha Hwang

Korea Advanced Institute of Science and Technology (KAIST)

Wooyoung Lim

Hong Kong University of Science & Technology (HKUST) - Department of Economics

Philip Ruane Neary

Royal Holloway University of London

Jonathan Newton

Kyoto University - Institute of Economic Research

Date Written: August 3, 2016

Abstract

When coordination games are played under the logit choice rule and there is intentional bias in agents’ non-best response behavior, the Egalitarian bargaining solution emerges as the long run social norm. Without intentional bias, a new solution, the Logit bargaining solution emerges as the long run norm. These results contrast with results under non-payoff dependent deviations from best response behavior, where it has previously been shown that the Kalai-Smorodinsky and Nash bargaining solutions emerge as long run norms. Experiments on human subjects suggest that non-best response play is payoff dependent and displays intentional bias. This suggests the Egalitarian solution as the most likely candidate for a long run bargaining norm.

Keywords: Evolution, Nash Program, Logit Choice, Egalitarianism

JEL Classification: C73, C78

Suggested Citation

Hwang, Sung-Ha and Lim, Wooyoung and Neary, Philip Ruane and Newton, Jonathan, Conventional Contracts, Intentional Behavior and Logit Choice: Equality Without Symmetry (August 3, 2016). Available at SSRN: https://ssrn.com/abstract=3066510 or http://dx.doi.org/10.2139/ssrn.3066510

Sung-Ha Hwang

Korea Advanced Institute of Science and Technology (KAIST) ( email )

Hoegi-ro 85
Dongdaemun-gu
Seoul

Wooyoung Lim

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

Clear Water Bay
Kowloon, Hong Kong
China

Philip Ruane Neary

Royal Holloway University of London ( email )

Egham
Surrey
TW20 0EX
United Kingdom

Jonathan Newton (Contact Author)

Kyoto University - Institute of Economic Research ( email )

Yoshida-Honmachi
Sakyo-ku
Kyoto 606-8501
JAPAN

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