Department of Economics and Business - Universitat Pompeu Fabra

Title:: A one-shot Prisonersâ€™ Dilemma with procedural utility
Author:: Marc Le Menestrel
Date:: June 2003
Abstract:: This article introduces a model of rationality that combines procedural utility over actions with consequential utility over payoffs. It applies the model to the Prisoners’ Dilemma and shows that empirically observed cooperative behaviors can be rationally explained by a procedural utility for cooperation. The model characterizes the situations in which cooperation emerges as a Nash equilibrium. When rational individuals are not solely concerned by the consequences of their behavior but also care for the process by which these consequences are obtained, there is no one single rational solution to a Prisoners’ Dilemma. Rational behavior depends on the payoffs at stake and on the procedural utility of individuals. In this manner, this model of procedural utility reflects how ethical considerations, social norms or emotions can transform a game of consequences.
Keywords:: Prisonerâ€™s Dilemma; Rationality; Procedural Utility; Social Norms; Ethics; Emotions
JEL codes:: A13; C72
Area of Research:: Business Economics and Industrial Organization

Download the paper in PDF format