Social Behavior- Game Theory and Reciprocity Georgia De Vito Berg, J., Dickhaut, J., & Mccabe, K. (1994). Trust, Reciprocity, and Social History. Games and Economic Behavior, 122-142. Retrieved November 16, 2014, from http://www.sciencedirect.com/science/article/pii/S0899825685710275

Video https://www.youtube.com/watch?v=5adPymgvzfo Start at 1:55 https://www.youtube.com/watch?v=t9Lo2fgxWHw Nash equilibrium= a condition in which every participant has optimized its outcome, based on the other players' expected decision. https://www.youtube.com/watch?v=5adPymgvzfo https://www.youtube.com/watch?v=5adPymgvzfo

Overview Economic models assume individuals act in own self interest Make decisions to benefit individual vs. group Game Theory  should economic models consider individual or group mentality “Evolutionary models predict the emergence of trust because it maximizes genetic fitness though myopic self interest suggests cheating”

Hypothesis and Procedure Hypotheses Ma>0 then kb(3Ma)=0 kb(3Ma)>Ma Double-blind Investment game Complete anonymity, only play once Subjects in room A decide how much of $10 to send to subject in room B, which will triple reroute Subjects in room B then decide how much of received money they will keep or send back to room A Nash equilibrium predicts no money would be sent Not the case, why? Nash equilibrium= a condition in which every participant has optimized its outcome, based on the other players' expected decision.

Conclusions from Study Reciprocity exists as a basic element of human behavior and that this is accounted for in the trust extended to an anonymous counterpart Self interest alone does not explain results Shared social history strengthens the relationship between trust and reciprocity Higher average return growth than average sent money Internalization of social norms

Critical Review Unanswered questions/ unclear Interesting Notes People are more trusting than expected A general shared social history changes behavior to favor group benefit mentality Including trust and reciprocity would allow for better explanations of economic institutions Unanswered questions/ unclear How does gender affect trust/reciprocity? What if the sender risked personal loss? Why is trust less dependent on social history than reciprocity?

Questions? Thoughts?