Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/31188 
Year of Publication: 
2004
Series/Report no.: 
Discussion Paper No. 1414
Publisher: 
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science, Evanston, IL
Abstract: 
The assumption that decision makers choose actions to maximize their preferences is a central tenet in economics. This assumption is often justied either formally or informally by appealing to evolutionary arguments. In contrast, we show that in almost every game and for almost every family of distortions of a player's actual payoffs, some degree of this distortion is benecial to the player because of the resulting effect on opponents' play. Consequently, such distortions will not be driven out by any evolutionary process involving payoff-monotonic selection dynamics, in which agents with higher actual payoffs proliferate at the expense of less successful agents. In particular, under any such selection dynamics, the population will not converge to payoff-maximizing behavior. We also show that payoff-maximizing behavior need not prevail even when preferences are imperfectly observed.
Document Type: 
Working Paper

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