Evolutionary Stability of Prospect Theory Preferences

We demonstrate that in simple 2 X 2 games (cumulative) prospect theorypreferences can be evolutionarily stable, i.e. a population of players withprospect theory preferences can not be invaded by more rational players. Thisholds also if probability weighting is applied to the probabilities of mixedstrategies. We also show that in a typical game with infinitely many strategies,the “war of attrition”, probability weighting is evolutionarily stable.[...]

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Year of publication:	2009-10-01
Authors:	Rieger, Marc Oliver
Institutions:	Institut für Schweizerisches Bankwesen <Zürich>
Subject:	Stabilität \| Evolution \| development \| Erwartungstheorie \| Nash-Gleichgewicht \| Nash equilibrium

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1 Introduction<br<1.1 Expected utility theory and prospect theory
1.2 Prospect theory preferences in games
2 Evolutionary stability of probability weighting
2.1 A simple 2 X 2 game
2.2 A general class of 2 X 2 games where probability weighting is evolutionarilystable
2.3 Evolutionary stability of probability weighting in games with infinitestrategy space
2.4 Generalizations to continuous stability and evolutionaryrobustness
3 Discussion
A Proofs
Acknowledgement
References

Persistent link: https://www.econbiz.de/10005868526