In this study we propose a formal framework for the indirect evolutionary approach as initiated by Güth and Yaari (1992). It allows to endogenize preferences and to study their evolution. We define two-player indirect evolutionary games with observable types and show how to incorporate...

In a recent paper Bagwell (1995) pointed out that only the Cournot outcome, but not the Stackelberg outcome, can be supported by a pure Nash equilibrium when actions of the Stackelberg leader are observed with the slightest error. The Stackelberg outcome, however, remains close to the outcome of...

Applying an indirect evolutionary approach with endogenous preference formation, we show that a legal system can induce players to reward trust even if material incentives dictate to exploit trust. By analyzing the crowding out or crowding in of trustworthiness implied by various verdict rules,...

We show in this paper that none of the existing static evolutionary stability concepts (ESS, CSS, uninvadability, NIS) is sufficient to guarantee dynamic stability in the weak topology with respect to standard evolutionary dynamics if the strategy space is continuous. We propose a new concept,...

Predating predators requires at least three specimen to which we refer as players 1, 2, and 3. Player 1 has simply to guess nature when trying to find food. Player 2 is hunting player 1 in the hope that 1 is well-fed but must also avoid being hunted by player 3. One major motivation is to test...

A situation in which the regularity in nature can be utilized while competition is to be avoided is modelled by the Parasite game. In this game regular behaviour could enhance guessing nature but strategic randomization is required to avoid being outguessed. In an experiment, 60 pairs of...

Studying evolutionarily successful behavior we show in a general framework that when individuals maximizing payoff differentials invest resources in punishing others. Interestingly, these investments are increasing in individuals, own wealth and decreasing in the wealth of others.

The study of evolutionary dynamics was so far mainly restricted to finite strategy spaces. In this paper we show that this restriction is in most cases unnecessary. We give a mild condition under which the continuous time replicator dynamics are well defined for infinite strategy spaces....

The evolution of trustworthiness as a major aspect of business ethics depends crucially on whether it can be signaled. If this is impossible, only opportunistic traders will survive. Whereas previous studies have analysed detection agencies (Güth and Kliemt, 1994 and 1998) or have substituted...