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Economics of Reciprocity and Temptation

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Credible Asset Allocation, Optimal Transport Methods, and Related Topics (TES 2022)

Part of the book series: Studies in Systems, Decision and Control ((SSDC,volume 429))

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Abstract

Behavioral economics has shown that in many situations, people’s behavior differs from what is predicted by simple traditional utility-maximization economic models. It is therefore desirable to be able to accurately describe people’s actual behavior. In some cases, the difference from the traditional models is caused by bounded rationality—our limited ability to process information and to come up with a truly optimal solutions. In such cases, predicting people’s behavior is difficult. In other cases, however, people actually optimize—but the actual expression for utility is more complicated than in the traditional models. In such case, it is, in principle, possible to predict people’s behavior. In this paper, we show that two phenomena—reciprocity and temptation—can be explained by optimizing a complex utility expression. We hope that this explanation will eventually lead to accurate prediction of these phenomena.

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Acknowledgements

This work was supported in part by the National Science Foundation grants 1623190 (A Model of Change for Preparing a New Generation for Professional Practice in Computer Science) and HRD-1242122 (Cyber-ShARE Center of Excellence). It was also supported by the program of the development of the Scientific-Educational Mathematical Center of Volga Federal District No. 075-02-2020-1478.

Author information

Authors and Affiliations

  1. University of Texas at El Paso, El Paso, TX, 79968, USA

    Laxman Bokati, Olga Kosheleva & Vladik Kreinovich

  2. Institute for Research Science and Banking Technology, Banking University HCMC, 39 Ham Nghi District 1, Ho Chi Minh City, Vietnam

    Nguyen Ngoc Thach

Authors
  1. Laxman Bokati
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  2. Olga Kosheleva
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  3. Vladik Kreinovich
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  4. Nguyen Ngoc Thach
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Corresponding author

Correspondence to Vladik Kreinovich .

Editor information

Editors and Affiliations

  1. Faculty of Economics, Chiang Mai University, Chiang Mai, Thailand

    Songsak Sriboonchitta

  2. Department of Computer Science, University of Texas, El Paso, TX, USA

    Vladik Kreinovich

  3. Faculty of Economics, Center of Excellence in Econometrics, Chiang Mai University, Chiang Mai, Thailand

    Woraphon Yamaka

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Bokati, L., Kosheleva, O., Kreinovich, V., Thach, N.N. (2022). Economics of Reciprocity and Temptation. In: Sriboonchitta, S., Kreinovich, V., Yamaka, W. (eds) Credible Asset Allocation, Optimal Transport Methods, and Related Topics. TES 2022. Studies in Systems, Decision and Control, vol 429. Springer, Cham. https://doi.org/10.1007/978-3-030-97273-8_3

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