Social preferences and strategic thinking in centipede games : an experiment

• Main Authors: Yang, Yi, Zhang, Jiasheng, Zheng, Qi
• Other Authors: Yohanes Eko Riyanto
• Format: Final Year Project
• Language: English
• Published: 2015
• Subjects: DRNTU::Social sciences::Economic theory::Microeconomics; DRNTU::Science::Mathematics::Applied mathematics::Game theory
• Online Access: http://hdl.handle.net/10356/62758
• Institution: Nanyang Technological University

Empathy, defined as the ability to “understand and share the emotional states” of others, has been widely investigated by researchers in recent years. Our study investigated the role of empathy on subjects’ decisions in the constant-sum and increasing-sum centipede games, incorporating the empathy-related rationales of rationality, fairness and social optimality in our model. We adopted the revised Reading the Mind in the Eyes (RME-R) test and the Interpersonal Reactivity Index (IRI) test to measure empathy and the Social Value Orientation (SVO) Slider Measure to elicit subjects’ social preferences. Our results showed that subjects with higher empathy were more likely to make rational decisions in the constant-sum game. In addition, they were more probable to make reasonable decisions, which include rational or fair decisions in both games, as well as rational or fair decisions in the constant-sum game combined with socially optimal decisions in the increasing-sum game. Besides, our results suggested that empathy related most to rationality compared with fairness and social optimality in centipede games. Moreover, subjects with higher SVO scores were more likely to make fair decisions in the constant-sum game and make socially optimal decisions in the increasing-sum game. Our study may provide new insight into the role of empathy on subjects’ decisions in centipede games.