The Strategic Advantage of Negatively Interdependent Preferences

Koçkesen, Levent; Ok, Efe A.; Sethi, Rajiv

doi:10.1006/jeth.1999.2587

Cited by 120 publications

(72 citation statements)

References 19 publications

(45 reference statements)

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“…In our second application, we consider interdependent preferences, in which players differ with respect to the weight that they assign to their opponents' payoffs in their utility functions. 12 1 0 Koçkesen, Ok, Sethi (2000a, 2000b) study the effects of strategic complementarities in the evolutionary stability of interdependent preferences.…”

Section: Applicationsmentioning

confidence: 99%

“…Far from validating informal evolutionary arguments for payoff-maximizing behavior, this work shows that many different systematic departures from payoff maximization may survive evolutionary pressures in various models. Individuals in these models may have preferences that differ from their true material payoffs due, for example, to concerns about fairness Yaari 1992, Huck andOechssler 1998), social status Weiss 1997, 1998), altruism (Bester and Güth 1998), spite (Possajennikov 2000, Bolle 2000, envy (Bergman and Bergman, 2000), relative rather than absolute success (Koçkesen, Ok, andSethi 2000a, 2000b), or overconfidence (Kyle andWang 1997, Benos 1998). The main results in these papers show that such biases or dispositions may be evolutionarily stable in particular models, and thus immune to the appearance of rational "mutants" who maximize their actual material payoffs.…”

Section: Introductionmentioning

confidence: 99%

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The Dynamic Evolution of Preferences

2006

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This paper develops a general methodology for characterizing the dynamic evolution of preferences in a wide class of strategic interactions. We give simple conditions characterizing the limiting distribution of preferences in general games, and apply our results to study the evolutionary emergence of overconfidence and interdependent preferences. We also show that this methodology can be adapted to cases where preferences are only imperfectly observed.

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Section: Applicationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Dynamic Evolution of Preferences

2006

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“…For analyses of relative profit maximization see Schaffer (1989), Vega-Redondo (1997), Lundgren (1996), Kockesen et. al.…”

Section: Introductionmentioning

confidence: 99%

Relative profit maximization and Bertrand equilibrium with quadratic cost functions

Satoh

Tanaka

2013

Econom. bus. letters

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We study the Bertrand equilibrium in duopoly in which two firms produce a homogeneous good under quadratic cost functions, and they seek to maximize the weighted sum of their absolute and relative profits. We show that there exists a range of the equilibrium prices in duopolistic equilibria. This range of equilibrium prices is narrower and lower than the range of the equilibrium prices in duopolistic equilibria under pure absolute profit maximization, and the larger the weight on the relative profit, the narrower and lower the range of the equilibrium prices. In this sense relative profit maximization is more aggressive than absolute profit maximization.

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“…19 k In summary, the results of this section suggest that interdependent preferences eventually eliminate independent preferences in the long run in particular strategic environments. It is important to bear in mind, however, that our analysis has been based on the assumption that each member of the population interacts with each other member.…”

Section: Then (16) Holdsmentioning

confidence: 71%