Problem 8

Question 1

Ultimatum game

Answer 1

Involves 2 participants bargaining over an amount of money, where the proposer has to offer some proportion of the money

1. Either the responder accepts the offer, where the proposer keeps whatever is left
2. Or the responder declines the offer, then neither party gets to keep any money

–> segmential game

Question 2

According to the game theory, how will participants of the ultimatum game behave ?

Answer 2

That both participants will act in a way that will maximizes their self interest

–> responder should accept any offer, because however small he/she will go away with more than he/she had before

Question 3

Tit for tat

Answer 3

Begins by cooperating and then every subsequent action copies the action of the other player

–> punishes defection + rewards cooperation

Question 4

What stops/ prevents cooperation ?

Answer 4

Knowing the other party’s perspective + thinking slightly harder about the task at hand

Question 5

How does Fear play a role in the Ultimatum game ?

Answer 5

Fear explains the generosity of most proposers in the ultimatum game

–> generosity occurs due to fear of rejection by the responder, as then the proposer looses too

Question 6

Dictator game

Answer 6

“The dictator”, determines how to split an endowment (such as a cash prize) between himself and the second player

–> the recipient has no influence over the outcome

Question 7

How does Greed play a role in the Dictator game ?

Answer 7

People act out of greed when the fear of possible losses is removed

–> proposers offer less when there is no possibility of rejection, but still more than they would if they were acting out of self interest

Question 8

Social value orientation

(SVO)

Answer 8

Refers to a person’s preference about how to allocate resources (e.g. money) between the self and another person

–> e.g.: Prosocial people, individualists, competitors

Question 9

Prosocial people

(SVO)

Answer 9

Wish to maximize joint gain + equality in outcomes

Question 10

Individualists (SVO)

Answer 10

Only interested in maximizing their own gains

Question 11

Competitors (SVO)

Answer 11

Wish to maximize relative gain

–> the difference between one’s own + the others outcome

Question 12

What are the 4 factors that are associated with higher levels of cooperation ?

Answer 12

1. Pay-off to cooperation
2. Market integration
3. Increased trust
4. Communication

Question 13

What is “Noise” ?

Why is it considered to be a drawback to the TFT strategy?

Answer 13

1. Noise refers to an erroneous/wrong response
2. Noise may cause two interacting TFT players to enter into a cycle of never ending retaliation
   ex. : racial stereotypes, reputations, biases,

–> assumptions on how the other party will behave

Question 14

How can Noise be avoided ?

Answer 14

1. Adding an element of generosity or forgiveness (TFT+1)

–> when the other defects, still cooperating

2. Simple communication

Question 15

Why does communication increase cooperation ?

Answer 15

1. It promotes group solidarity (trust)
2. Allows group members to express their commitment to mutually cooperate

–> BUT: misleading communication (noise) can decrease cooperation

Question 16

Moralistic punishment

Answer 16

Occurs when non-cooperators are excluded from cooperative interactions or ostracized completely

–> fosters group cooperation

Question 17

Antisocial punishment

Answer 17

Occurs when the punisher reduces the resources of a person whose cooperation usually benefits the group + punisher

–> the punisher therefore pays a cost

–> result of wanting to take revenge

ASOZIAL

Question 18

Do-gooder derogation

Answer 18

Occurs when people who help others get criticized or ridiculed fo their efforts

Question 19

What are possible explanations for why people engage in antisocial punishment ?

Answer 19

1. Norm violators are punished for deviate from groups norms whether that means cooperating too much or too little
2. Attempt to stop high cooperators from looking too good, by forcing them to cooperate less

–> Barclays theory

Question 20

Biological market theory

(Barclay)

Answer 20

When there is competition to be chosen as a social partner, low cooperators will use antisocial punishment/do-gooder derogation to reduce others cooperation + make themselves look good by comparison

Question 21

Which strategies do people use to compete ?

Answer 21

1. Outbidding competitors
2. Making competitors look bad
3. Prevent competitors from cooperating in order to look better in comparison

–> Barclays theory

Question 22

Nash equilibrium

Answer 22

Refers to a situation where no one has a unilateral incentive to change strategy, meaning wanting to behave just like others do

–> involves common knowledge of rationality

e.x.: driving on the right side of the road - no one will change this strategy

Question 23

Unilateral deviation

Answer 23

Occurs when I am the only one to deviate from the population

Question 24

Iterated elimination of weakly dominated strategies

Answer 24

Involves eliminating all the strategies that we should never use, respectively that will definitely not help us win a game

Question 25

Which brain parts control our fairness + greed ?

Answer 25

Left + right dorsolateral PFC

–> right is involved in rejecting unfair offers

Question 26

Public goods dilemma

Answer 26

Public goods dilemma refers to a real-world decision whereby the outcome for any individual depends on the decisions of all involved parties

ex.: Prisoners dilemma

Question 27

Downing strategy

Answer 27

1. Begins by defecting, because one assumes the other party will be unresponsive for ones choice
2. Then checking for the actual response resulting in:
   * support of cooperation, but punishment of defection (like tit for tat)

BUT: Assumption of unresponsiveness will lead downing to get punished for its early defection; cooperation will most likely not occur

–> used for public good dilemmas

Question 28

Appraisal theory

Answer 28

States that emotions are adpative responses based on how you evaluate the situations you’re in

Question 29

Counterfactual thinking

(Upward vs downward)

Answer 29

1. Upward: “Could have been better”-mindset

–> associated with an increase in cooperation, in the next round

(Prosocial)

2. Downward: “Could have been better/Thats better than expected”-mindset

–> associated with a decrease in cooperation, in the next round

(Competitors)

=> Individualists will find a balance between upward + downward counterfactual thining

Question 30

Neuroeconomics

Answer 30

Refers to a research field that combines the studies of

a) economics

b) social neurosciences

c) psychology

–> discovered that the Reward systems + brain areas for trust are involved

–> e.g.: striatum, PFC

Question 31

Cross-cultural differences in antisocial punishment ?

Answer 31

Collectivistic countries use more antisoical punishment instead of actual punishment, whereas individualistic countries who usually have a stronge rule of law engage in more actual punishment and less antisocial punishment

–> antisocial punishment is harder in societies with weak rule of law

Question 32

Market integration

Answer 32

There is more coooperation when there is greater trading via markets

Question 33

Reciprocal fairness

Answer 33

Bad intentions are punished, whereas good intentions rewarded

Question 34

Simple choice theory

Answer 34

We always choose the simplest choice by creating values

–> VMPFC

Question 35

Threshold of decision making

Answer 35

Refers to the value of the decision-making variable at which the decision is made

• determines when a decision making process is completed

Question 36

Foreign language effect

Answer 36

Thinking in a foreign language, reduces decision biases

–> maybe due to the fact that the difficulty of using a foreign language would make decisions less systematic