Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/43774
Authors: 
Rieger, Marc Oliver
Year of Publication: 
2009
Series/Report no.: 
Working papers // Institute of Mathematical Economics 422
Abstract: 
We demonstrate that in simple 2 X 2 games (cumulative) prospect theory preferences can be evolutionarily stable, i.e. a population of players with prospect theory preferences can not be invaded by more rational players. This holds also if probability weighting is applied to the probabilities of mixed strategies. We also show that in a typical game with infinitely many strategies, the 'war of attrition', probability weighting is evolutionarily stable. Finally, we generalize to other notions of stability. Our results may help to explain why probability weighting is generally observed in humans, although it is not optimal in usual decision problems.
Subjects: 
prospect theory
existence of Nash equilibria
evolutionary stability
JEL: 
C70
C73
D81
Document Type: 
Working Paper

Files in This Item:
File
Size
319.42 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.