Virtual bargaining: a theory of social decision-making

Area of Science:

• Social Psychology
• Behavioral Economics
• Game Theory

Background:

• Strategic interactions in social contexts rely on interdependent actions.
• Existing game theory models, like Nash equilibrium, have limitations in solving social dilemmas and coordination problems.

Purpose of the Study:

• To propose and formalize a new theory of social decision-making called virtual bargaining.
• To test the empirical validity of virtual bargaining against traditional game theory in a novel experimental game.

Main Methods:

• Formalization of virtual bargaining principles, including 'feasible agreement' and negotiation.
• Introduction and experimental gameplay of the 'Boobytrap game', a Prisoner's Dilemma variant.
• Comparison of experimental choices with predictions from virtual bargaining and Nash equilibrium.

Main Results:

• Experimental data from the Boobytrap game align with virtual bargaining predictions.
• Participant choices did not match predictions derived from the standard Nash equilibrium account.
• Virtual bargaining offers a more accurate framework for understanding social decision-making in this context.

Conclusions:

• Virtual bargaining provides a novel and empirically supported framework for social decision-making.
• This theory offers a better explanation for behavior in social dilemmas than traditional game theory.
• Virtual bargaining may underpin various human activities, including joint action and communication.