DK Model

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การปรับปรุง เมื่อ 09:24, 22 สิงหาคม 2556

DK Model is a reciprocity model which was proposed by Dufwenberg and Kirchsteiger (2004)^[1]; therefore, we call it "DK" model for short. A reciprocity model is an economic model which tries to explain how reciprocity occurs in human interactions. Reciprocity can be either positive (e.g. gift giving, returning rewards) or negative (e.g. retaliation). Besides the DK model, altruistic model, inequity aversion model^[2], guilt aversion model ^[3]are some examples of the reciprocity model.

To see how the DK Model works, think about a gift giving situation where there are a giver and a receiver. The giver gave the receiver a gift. And, now, the receiver is deciding whether to return the giver a gift or not. In this simple situation, the receiver has only two choices: first, giving a gift and, second, not giving it. Normally, in economics, the receiver will choose the choice which optimally yields him expected utility. The DK Model explains how the receiver derives the expected utility from each possible choice. According to the model, the receiver measures how many kindness he perceived from the giver's gift giving and measures how many kindness he will return the giver from his returning gift. The more the receiver perceived kindness, the more kindness he would like to return. The model also explains the negative reciprocity similarly; the more the receiver perceived unkindness, the more unkindness he would like to retaliate.

The DK Model is different from other models in several aspects. First, the model incorporates an agent's expectation, or beliefs, endogenously; while, some models (like altruistic and inequity aversion models) do not endogenize the agent's beliefs. We call the type of belief-endogenous reciprocity models as psychological reciprocity model^[4]. Among the psychological reciprocity models, they are different on what emotional factors affect derivation of agent's utility. For example, kindness perception and kindness giving play the roles in the DK Model; and the feeling of guilt plays the role in guilt aversion model.

References

1. ↑ Dufwenberg, M., & Kirchsteiger, G. (2004). A theory of sequential reciprocity. Games and Economic Behavior, 268-298.
2. ↑ Fehr, E., & Schmidt, K.M. (1999). A theory of fairness, competition, and cooperation. The Quarterly Journal of Economics, 817-868
3. ↑ Battigalli, P., & Dufwenberg, M. (2007). Guilt in Games. American Economic Review, Papers & Proceeding, 170-176
4. ↑ Geanakoplos, J., Pearce, D., & Stacchetti, E. (1989). Psychological games and sequential rationality. Games and Economic Behavior, 60-79.