Some Experimental Evidence on the Evolution of Discrimination, Co‐Operation and Perceptions of Fairness

Abstract

When two people agree to trade, they unlock a mutual benefit, resolve a potential conflict and gain in proportion to their relative ‘aggression’, eg the Hawk‐Dove game. In an experiment with this game, a discriminatory convention evolved when half of the players were randomly assigned a red and the other half a blue label. Later, the same players were also offered the option of co-operating. Those disadvantaged by the colour-based discriminatory convention cooperated with one another most of the time while the rest did not. The paper offers an explanation of these observations based on a modification of Rabin (1993). The weaker are always anxious for justice and equality. The strong pay heed to neither. (Aristotle, Politics, s1318b) Many economic interactions mix mutual benefit with a measure of conflict. For instance, when two people trade, there is often more than one price where both will benefit. The high end of the range favours the seller while the lower advantages the buyer. So, when they settle on a price and trade, they unlock a mutual benefit and resolve a potential conflict. The Hawk‐Dove (HD) game captures these elements, albeit in a rather simple way as each player only has a choice between being a hard bargainer (a hawk) and a soft one (a dove). Nevertheless, this is why it is regarded as one of the classic games of social life and why it is important to be able to predict behaviour in this game. Prediction, however, is difficult in the HD game for reasons that relate to some fundamental issues in game theory. The game has multiple Nash equilibria and the equilibrium selection problem is not readily solved, if we stick with the mathematical description of the game, by an appeal to salience. The symmetrical solution, for instance, echoes the symmetry of the game, but it is not a Nash equilibrium and so does not seem a good candidate for salience. Likewise, the two pure strategy equilibria are symmetrical with one another and so the appeal of one looks as strong as the other. It is possible, however, that a factor that is extraneous to the mathematical description of the game might make one of these asymmetric equilibria salient. Indeed, evolutionary theorists argue that extraneous factors which distinguish between the players and which are common knowledge can ‘seed’ conventions which advantage one type of player relative to another, see for example, Sugden (1986) and Weibull (1995) ‐ see also Lewis (1969) on conventions.