Social Interactions (Unit 4) Flashcards
game
A model of strategic interaction that describes the players, the feasible strategies, the information that the players have, and their payoffs.
game theory
A branch of mathematics that studies strategic interactions, meaning situations in which each actor knows that the benefits they receive depend on the actions taken by all
best response
the strategy that will give a player the highest payoff, given the strategies that the other players select (it is just a thought process in the mind of players and is not what is really happening –> in game theory, the players make the decision simultaneously and without coordination)
dominant strategy equilibrium
An outcome of a game in which every player plays his or her dominant strategy
social dilemma
A situation in which actions taken independently by individuals in pursuit of their own private objectives result in an outcome which is inferior to some other feasible outcome that could have occurred if people had acted together, rather than as individuals (e.g traffic, climate change)
altruism
The willingness to bear a cost in order to benefit somebody else
reciprocity
A preference to be kind or to help others who are kind and helpful, and to withhold help and kindness from people who are not helpful or kind
inequality aversion
A dislike of outcomes in which some individuals receive more than others
Nash Equilibrium
an outcome where no player has an incentive to unilaterally (without an agreement) change their strategy
Prisoner’s dilemma
a situation in which two individuals acting in their own self-interests do not produce the optimal outcome.
payoff
the utility each player
derives from each outcome.
dominant strategy
strategy that will give a player the highest payoff, irrespective what the other players do
(when your best response is the same in both cases)
ultimatum game
there is a proposer and a responder. The responder can reject or accept the offer, but the proposer offers the lowest possible amount because something is better than nothing for the responder
tit for tat strategy
a strategy in a repeated game where players choose the ‘cooperate’ action in the first round and, in subsequent rounds of play, mirror the other player’s previous actions
power
the ability for individuals to
get what they want in interactions with others
how do property owners have bargaining power?
Set the terms of the exchange (i.e. they make a take it-or-leave-it offer like the Proposer in an Ultimatum
game)
Bargain with multiple workers (i.e. when there is competition among responders to accept low offers)
Impose or threaten to impose costs on others (i.e. they can terminate the contract)
