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| title | chunk | source | category | tags | date_saved | instance |
|---|---|---|---|---|---|---|
| Behavioral game theory | 3/6 | https://en.wikipedia.org/wiki/Behavioral_game_theory | reference | science, encyclopedia | 2026-05-05T15:10:04.395995+00:00 | kb-cron |
== Examining social utility and preferences through games == Simple games are regularly utilized in behavioral game theory experiments in order to examine player's social utility. The simplicity of these games means that players do not face intellectual challenges, and player's choices are not impacted or altered by the game itself. This makes the games extremely useful in understanding social preferences. Games often include monetary rewards to easily calculate how players will act if their choices are driven by monetary incentives and payoffs. Player's actions are often shaped by the social utility function, whereby their choices are shaped by the benefits that both they and their opponent would receive. Traditional game theory would expect rational players to attempt to maximise their monetary rewards. If these calculations were wrong, however, and if players choose not to maximise their utility, then players would be exhibiting a social preference for a particular action. Behavioral game theory explains how players often deviate from traditional norms, and quite regularly consider factors such as social welfare when making their strategic decisions. For example, players are known to sacrifice high monetary rewards in order to maintain fairness within the game. Different games demonstrate different social preferences. For example, the ultimatum game is known to demonstrate negative reciprocity. The premise of the ultimatum game is that Player 1 is given a certain amount of money, and is then forced to offer a certain amount to Player 2. Player 2 can then choose to either accept or reject Player 1's offer. If Player 2 accepts the offer, then both players are able to enjoy the amount offered. If Player 2 rejects the offer, then neither player is able to receive the money. Results from ultimatum game experiments demonstrate that players value being treated fairly and do not react well when one player is attempting to receive better payoffs than the other. Studies show that people are more likely sacrifice all monetary rewards if they are offered less than 20 percent of the original amount. This represents negative reciprocity preferences, as players would rather sacrifice their payoff in order to punish their opponent for their unkind behavior. However, being scared of having their offers rejected, people often give Player 2 around 40-50 percent of the original amount. Another example of a social preference is positive reciprocity, which is displayed in the gift exchange game. The gift exchange game involves Player 1 either keeping set amount of money, or offering an even larger amount to Player 2. Player 2 is then able to decide how they wish to divide the money between the two of them. In this game, Player 1 trusts that Player 2 will return a certain amount of money to them. Findings from this game often show that if Player 2 is offered a generous amount of money from Player 1, then they are more likely to return the favour and give Player 1 back an equally generous amount. This demonstrates how players appreciate being treated kindly, and are more likely to treat their opponent kindly in return. The concept of positive reciprocity can be seen in real-life examples, such as the workplace. If an employer offers a large wage to their employees, then the employees often pay back the favour by working harder. Altruism is another social preference seen in the dictator game. This game is similar to the ultimatum and gift exchange games. In this game, however, Player 1 is given an amount of money, and can then offer however much they would like to Player 2. Unlike the ultimatum game, Player 2 cannot reject the amount they have been offered. As a result, people are more likely to reduce the amount of money they offer to Player 2. Despite this, results show that people still offer Player 2 a sum of around 20-30 percent of the original amount. The dictator game shows how people are willing to share their rewards with people, despite not being forced to.
The prisoner's dilemma game is effective in examining the social preference of cooperation. The logic behind the prisoner's dilemma is that every players rational choice is to defect, rather than cooperate. As it is in each player's best interest to defect, both players would rationally choose to defect. This results in a worse payoff for both players. The ultimatum game requires two players to agree on the allocation of money, yet what is reflected by the game is that humans are more concerned with whether the allocation is fair than whether the benefits are maximized. This behavior also illustrates that behavioral game theory is more well thought out than traditional game theory. However, in an attempt to reach a fair equilibrium for both players, results from the prisoner's dilemma game show that people cooperate much more than traditionally thought. When one player decides to cooperate, then the other players are more likely to cooperate too. This goes against the traditional beliefs that people only make decisions that maximise their utility.
== Examples of games used in behavioral game theory research ==
Signaling game Dictator Game Ultimatum Game Keynesian beauty contest Normal form game Cooperative game Gift-exchange game Prisoner's Dilemma Zero-sum Games
== Factors that affect rationality in games ==