A Path Toward Fairness

Abstract

Recent experimental findings on behavioral games show that subjects do not behave in a self-interest-maximizing manner as would be predicted by game theory. An evolutionary approach attempts to explain why 'irrational' strategies can be dominant in the long run. The article presents an evolutionary model of the Ultimatum game by considering the impact of interaction structure. The question of interest is: will the dominant strategy in evolution be different from the Nash-equilibrium strategy if players are allowed to choose partners they prefer based on the reinforcements (payoffs) from past interactions? Numerical simulation shows that the strategies of fairness could evolve to be dominant. Conditions of the emergence and its properties are discussed. The model offers a supplementary theoretical account for recent field work that indicates a positive association between market integration and the likelihood of making fair offers in the Ultimatum game (Henrich et al. 2004).