What to Maximize if You Must

Aviad Heifetz, Chris Shannon () and Yossi Spiegel

No 1414, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: The assumption that decision makers choose actions to maximize their preferences is a central tenet in economics. This assumption is often justi…ed 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 bene…cial to the player because of the resulting effect on opponents’ play. Consequently, such distortions will not be driven out by any evolutionary process involving payo¤-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 payo¤-maximizing behavior. We also show that payoff-maximizing behavior need not prevail even when preferences are imperfectly observed.

Keywords: dispositions; evolution of preferences; genericity; selection dynamics; imperfect observability (search for similar items in EconPapers)
Date: 2004-07
New Economics Papers: this item is included in nep-cbe, nep-evo and nep-hpe
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: What to maximize if you must (2007)
Working Paper: What to Maximize if You Must (2003)
Working Paper: What to maximize if you must (2003)
Working Paper: What to Maximize If You Must (2003)
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