Theory and Decision 50 (4):295-303 (2001)
In the Divide-the-Dollar (DD) game, two players simultaneously make demands to divide a dollar. Each player receives his demand if the sum of the demands does not exceed one, a payoff of zero otherwise. Note that, in the latter case, both parties are punished severely. A major setback of DD is that each division of the dollar is a Nash equilibrium outcome. Observe that, when the sum of the two demands x and y exceeds one, it is as if Player 1's demand x (or his offer (1âx) to Player 2) suggests that Player 2 agrees to Î»x < 1 times his demand y so that Player 1's demand and Player 2's modified demand add up to exactly one; similarly, Player 2's demand y (or his offer (1ây) to Player 1) suggests that Player 1 agrees to Î»yx so that Î»yx+y = 1. Considering this fact, we change DD's payoff assignment rule when the sum of the demands exceeds one; here in this case, each player's payoff becomes his demand times his Î»; i.e., each player has to make the sacrifice that he asks his opponent to make. We show that this modified version of DD has an iterated strict dominant strategy equilibrium in which each player makes the egalitarian demand 1/2. We also provide a natural N-person generalization of this procedure
|Keywords||Divide the dollar Nash equilibrium The egalitarian outcome Iterated dominance equilibrium|
|Categories||categorize this paper)|
References found in this work BETA
No references found.
Citations of this work BETA
Implementing Equal Division with an Ultimatum Threat.Esat Doruk Cetemen & Emin Karagözoğlu - 2014 - Theory and Decision 77 (2):223-236.
Similar books and articles
An N -Player Semantic Game for an N + 1-Valued Logic.Shier Ju & Xuefeng Wen - 2008 - Studia Logica 90 (1):17 - 23.
Omniscience and Omnipotence: How They May Help - or Hurt - in a Game.Steven J. Brams - 1982 - Inquiry : An Interdisciplinary Journal of Philosophy 25 (2):217 – 231.
Counterfactuals, Belief Changes, and Equilibrium Refinements.Cristina Bicchieri - 1993 - Philosophical Topics 21 (1):21-52.
KâPlayer Additive Extension of Two-Player Games with an Application to the Borda Electoral Competition Game.Gilbert Laffond, Jean-François Laslier & Michel Le Breton - 2000 - Theory and Decision 48 (2):129-137.
Variations on a Game of Gale (I): Coding Strategies.Marion Scheepers - 1993 - Journal of Symbolic Logic 58 (3):1035-1043.
Learning to Signal: Analysis of a Micro-Level Reinforcement Model.Brian Skyrms, Raffaele Argiento, Robin Pemantle & and Stanislav Volkov - manuscript
A Characterization of Von Neumann Games in Terms of Memory.Giacomo Bonanno - 2004 - Synthese 139 (2):281 - 295.
Added to index2010-09-02
Total downloads48 ( #108,543 of 2,168,955 )
Recent downloads (6 months)2 ( #186,783 of 2,168,955 )
How can I increase my downloads?