Evolutionary Game-theoretical Rationality, Rejection of Relative Deprivation, Social Intelligence, Inequality in Transaction-role Opportunities, and Social Discrimination: A construction of macro-social and economic theory from a micro-behavioral moder through thought experiments based on the ultimatum game

Author Name YAMAGUCHI Kazuo (Visiting Fellow, RIETI)
Creation Date/NO. December 2022 22-J-041
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This paper presents an example for a macro-social and economic theory derived from the evolutionary game-theoretical micro-behavioral model. The theory introduced in this paper is based on thought experiments and simulations of the ultimatum game and leads to the following findings.

  1. (1)From the evolutionary game-theoretical viewpoint, a rejection of relative deprivation based on a certain threshold of rejection becomes more rational under a broad range of initial conditionals than the rational choice in the sense of the neoclassical economic theory.
  2. (2)Under the equality of opportunity in the role of transactions, a development of social intelligence that enables the cognition of heterogeneous others’ strategies (which imply the patterns of choices) reinforces the tendency described in (1). As the proportion of people who acquired social intelligence increases, the choice of a threshold of rejection which is closer to a choice of egalitarian actors becomes more rational and evolutionarily stable. The development of social intelligence makes people obtain higher benefits, on average, because it increases the rate of attaining agreements among heterogeneous actors and thereby reduces the transaction costs.
  3. (3)Under the inequality of opportunity in the role of transactions where “proposers” are price setters and “responders” are price takers, rational actors in the neoclassical economic sense obtain the largest benefits as responders when no social intelligence exists among proposers. However, a development of social intelligence among proposers makes responders who reject relative deprivation below an uncertain threshold obtain more benefits than rational actors, and thereby makes the former actors more evolutionarily stable than the latter actors.
  4. (4)Acquisition of social intelligence among proposers under the inequality of opportunity in the role of transactions makes the rate of agreement between proposers and responders higher, and thereby make people wealthier on average by reducing the transaction costs.
  5. (5)When responders who acquired social intelligence use their knowledge of proposers’ strategies to select proposers for whom responders can expect a smaller extent of relative deprivation in transactions, it generates a transfer of benefits from proposers to responders without changing the average benefits for the population of proposers and responders, by increasing the proportion of agreements which have a smaller extent of relative deprivation for responders, and therefore makes society attain more equality between proposers and responders without changing the average wealth among people.
  6. (6)When proposers who acquired social intelligence use their knowledge of responders’ strategies to discriminate against responders who seek a smaller extent of relative deprivation, it generates a reduction in the average benefits not only among responders but also among proposers. This occurs because when proposers with social intelligence avoid responders with a higher threshold of rejection, proposers without social intelligence are matched with those responders and are likely to fail to attain agreements with the responders, and the average gain of benefits that proposers with social intelligence obtain is smaller in amount than the average loss of benefits that proposers without social intelligence obtain. Thus, the selective choice of more “exploitable” responders by proposers with social intelligence has a significant negative externality in making society less wealthy by increasing the average transaction costs.

The paper also discusses implications of these findings with respect to the labor market issues in Japan.