A Resource-Rational Mechanistic Approach to One-shot Non-cooperative Games: The Case of Prisoner’s Dilemma

AbstractThe concept of Nash equilibrium has played a profound role in economics, and is widely accepted as a normative stance for how people should choose their strategies in competitive environments. However, extensive empirical evidence shows that people often systematically deviate from Nash equilibrium. In this work, we present the first resource-rational mechanistic approach to one-shot, non-cooperative games (ONG), showing that a variant of normative expected-utility maximization acknowledging cognitive limitations can account for important deviations from the prescriptions of Nash equilibrium in ONGs. Concretely, we show that Nobandegani et al.’s (2018) metacognitively-rational model, sample-based expected utility, can account for purportedly irrational cooperation rates observed in one-shot, non-cooperative Prisoner’s Dilemma. This also accurately explains how cooperation rate varies depending on the parameterization of the game. As we show, cooperation can arise from purely selfish, expected-utility maximization subject to cognitive limitations.


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