Title: | Incorporating Fairness into Game Theory and Economics |

Author: | Matthew Rabin |

Journal: | The American Economic Review |

Volume: | 83 |

Number: | 5 |

Pages: | 1281--1302 |

Year: | 1993 |

Abstract: | People like to help those who are helping them, and to hurt those who are hurting them. Outcomes reflecting such motivations are called fairness equilibria. Outcomes are mutual-max when each person maximizes the other's material payoffs, and mutual-min when each person minimizes the other's payoffs. It is shown that every mutual-max or mutual-min Nash equilibrium is a fairness equilibrium. If payoffs are small, fairness equilibria are roughly the set of mutual-max and mutual-min outcomes; if payoffs are large, fairness equilibria are roughly the set of Nash equilibria. Several economic examples are consid- ered, and possible welfare implications of fairness are explored. |

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@Article{rabin93a, author = {Matthew Rabin}, title = {Incorporating Fairness into Game Theory and Economics}, journal = {The American Economic Review}, year = 1993, volume = 83, number = 5, pages = {1281--1302}, abstract = {People like to help those who are helping them, and to hurt those who are hurting them. Outcomes reflecting such motivations are called fairness equilibria. Outcomes are mutual-max when each person maximizes the other's material payoffs, and mutual-min when each person minimizes the other's payoffs. It is shown that every mutual-max or mutual-min Nash equilibrium is a fairness equilibrium. If payoffs are small, fairness equilibria are roughly the set of mutual-max and mutual-min outcomes; if payoffs are large, fairness equilibria are roughly the set of Nash equilibria. Several economic examples are consid- ered, and possible welfare implications of fairness are explored.}, url = {http://jmvidal.cse.sc.edu/library/rabin93a.pdf}, cluster = {1289972598436133877} }Last modified: Wed Mar 9 10:13:49 EST 2011