Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/53172
Authors: 
Tavoni, Alessandro
Year of Publication: 
2009
Series/Report no.: 
Nota di lavoro // Fondazione Eni Enrico Mattei: Sustainable development 40.2009
Abstract: 
Substantial evidence has accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts which perform better empirically; one such example is the impulse balance equilibrium (Selten, Chmura, 2008), which introduces a psychological reference point to which players compare the available payoff allocations. This paper is concerned with advancing two new, empirically sound, concepts: equity-driven impulse balance equilibrium (EIBE) and equity-driven quantal response equilibrium (EQRE): both introduce a distributive reference point to the corresponding established stationary concepts known as impulse balance equilibrium (IBE) and quantal response equilibrium (QRE). The explanatory power of the considered models leads to the following ranking, starting with the most successful in terms of fit to the experimental data: EQRE, IBE, EIBE, QRE and Nash equilibrium.
Subjects: 
Fairness
Inequity aversion
Aspiration level
Impulse balance
Quantal Response
Behavioral economics
Experimental economics
JEL: 
C72
C91
D01
D63
Document Type: 
Working Paper

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