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The material payoffs of one player in each game are based on X, while the the material payoffs of the other player are based on 1/X.
The first term of the utility function: (pi _{i}) represents the material payoffs of player i.
Unlike the FE and the SRE, we include the material payoffs of the other members of the group of each player in the utility function.
As the material payoffs of single game 2 grow arbitrarily large, the only outcome for single game 1 in the fairness equilibrium is (defect, defect).
If (lambda _{i}) and (theta _{i}) are positive for every player, when X becomes arbitrarily large, the material payoffs of players 2 and 3 dominate their reciprocal payoffs.
The first one is that the utility of a player increases as the material payoffs of the other members of her group increases.
Similar(35)
If no trade takes place both parties end up with a material payoff of zero.
Strict m-monotonicity requires that – holding the material payoff of the other person constant – the DM strictly prefers more own material payoff to less own material payoff.
If she is rational, she must believe that the expert behaves in a way that implies a material payoff of at least 0 for her.
An important feature of the EET is that within each of the two blocks the material payoff of the passive person in the asymmetric allocation is held constant, while the material payoff of the DM increases monotonically from one choice to the next.
Thus, for an expert not to have an incentive to overcharge, the material payoff of the customer must receive at least the same weight in the expertʼs utility function as the expertʼs own material payoff.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com