February 27, 2004
Homo Reciprocans
In the post about the ultimatum game I noted that according to the concept of Homo economicus we should not see any rejections along the equilibrium path of play, but in reality we do see rejections. This presents a problem for Homo Economicus in that we'd like a theory that has predictive power. So a new concept maybe needed, one such concept is Homo reciprocans.
When in situations where retaliation is costly and/or impossible Homo reciprocans behaves just like Homo economicus--i.e., self-interested behavior that does not exhibit the behavior we saw in the ultimatum game.1 But in strategic situations in general Homo reciprocans will retaliate even if it is costly to do so. In short, Homo reciprocans will tend to cooperate in situations where Homo economicus wont, but when confronted with "cheating" will retaliate even to the point of incurring costs to do so.
With Homo reciprocans you get all the outcomes of Homo economicus in certain situations (i.e., situations with a large number of players), but in other situations you get more nuanced results that fit some of the experimental observations.
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1For example when playing the ultimatum game where player 1 is a computer, and player 2 knows this the number of rejections drops dramatically.
