Evolving Aspirations and Cooperation

Rajeeva Karandikar, Dilip Mookherjee, Debraj Ray, Fernando Vega-Redondo

    Research output: Contribution to journalArticlepeer-review

    Abstract

    A 2×2 game is played repeatedly by two satisficing players. The game considered includes the Prisoner's Dilemma, as well as games of coordination and common interest. Each player has anaspirationat each date, and takes an action. The action is switched at the subsequent period only if the achieved payoff falls below aspirations; the switching probability depends on the shortfall. Aspirations are periodically updated according to payoff experience, but are occasionally subject to trembles. For sufficiently slow updating of aspirations and small tremble probability, it is shown that both players must ultimately cooperate most of the time.Journal of Economic LiteratureClassification Numbers C72, D83.

    Original languageEnglish (US)
    Pages (from-to)292-331
    Number of pages40
    JournalJournal of Economic Theory
    Volume80
    Issue number2
    DOIs
    StatePublished - Jun 1998

    ASJC Scopus subject areas

    • Economics and Econometrics

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