Towards an understanding of the interplay between other regarding preferences and group formation in strategic environments
Many strategic situations are characterized by player’s preferences that take into account the well being of others. These preferences guide humans in their choices with whom to participate in economical or social activities. Little attention has been given to how group formation shapes players’ beliefs concerning preferences and how preferences guide the formation of groups.
Here we investigate how these other regarding preferences influence the matching of players, both in pairwise and N-player scenarios, and vice versa how group dynamics shape the beliefs concerning preferences (i.e. formation and adaptation of belief models) of the individual agent’s participating in two concrete strategic problems: the dictator game and its extension the trust game.
To solve this problem we combine current computational research on belief modeling and stable matching with the population dynamical models classically used in evolutionary game theory (EGT). Our final aim is to provide insight into how collective systems are shaped by beliefs/preferences models, bringing the abstract results typical for EGT closer to realm of real-world strategic situations.
To ensure the validity of this research, an external partner will investigate experimentally the questions equivalent to those raised in this proposal through a number of behavioral economics experiments. These experiments will not only ensure the validity of the results but they will also guide the research directions followed.