Game theory--Microeconomics.doc
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Game theory--Microeconomics.doc

Gametheory--Microeconomics.doc

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Howdoeshumangenerosityaffecttheiteratedequilibrium?AnexperimentstudyofN-Prisoner’sDilemmaonbehaviouralgametheoryPAGE\*MERGEFORMAT6TableofcontentsTOC\o"1-3"\h\z\uHYPERLINK\l"_Toc336875507"TableofcontentsPAGEREF_Toc336875507\h0HYPERLINK\l"_Toc336875508"1.IntroductionPAGEREF_Toc336875508\h1HYPERLINK\l"_Toc336875509"2.LiteraturereviewPAGEREF_Toc336875509\h1HYPERLINK\l"_Toc336875510"2.1ReviewofgametheoryPAGEREF_Toc336875510\h1HYPERLINK\l"_Toc336875511"2.2ReviewofN-prisoner’sdilemmaPAGEREF_Toc336875511\h2HYPERLINK\l"_Toc336875512"3.EmpiricalanalysisPAGEREF_Toc336875512\h2HYPERLINK\l"_Toc336875513"3.1ProblemdescriptionPAGEREF_Toc336875513\h2HYPERLINK\l"_Toc336875514"3.2ModelPAGEREF_Toc336875514\h3HYPERLINK\l"_Toc336875516"3.3ResultsPAGEREF_Toc336875516\h3HYPERLINK\l"_Toc336875517"4.ConclusionsPAGEREF_Toc336875517\h4HYPERLINK\l"_Toc336875518"5.DiscussionsPAGEREF_Toc336875518\h5HYPERLINK\l"_Toc336875519"ReferencesPAGEREF_Toc336875519\h6IntroductionSincegametheoryisacrucialdecision-makingstrategyinmicroeconomics,thesolutionofagameshouldmakesenseintherealworld.Nashequilibrium(1951)anditsextensionsmakethesolutionpowerful.Unfortunately,thegameisplayedbypeopleandtheirbehavioursincreasinglyaffectthesolutionsofgames.Bettersolutionsbecomefeasiblegiventhathumanbeingstakefairnessintoaccount.Therefore,amorereasonablestrategy,behavioralgametheory(BGT),isabletoexplainwhyNashequilibriumisnotalwaysorevenneverachieved.BGTcouldbeconsideredasamixtureofgametheory,sociologyandpsychology.Theaimofthisstudyistoexaminehowhumanbehavioursaffectthefinalequilibriumbymeansofastudyofwell-knownPrisoner’sDilemma.Weneedtoextendittonprisonersandexploitarandomprobabilitymodeltorepresenthumanbehaviours.Consequently,thebehaviourisformulatedinformofprobability.Althoughthisheuristicrepresentationwillnotincludealluncertaintiesthatmatter,itwillbeanovelwaytothinkaboutthiskindofanalysis.Finally,wewill