Social comparisons and Reference points in Game-theoretic models

This thesis analyzes how players' relative evaluation of the actions other agents choose affects individuals' strategic behavior, both in simultaneous and sequential-move games. First, in "The importance of foregone options: generalizing social comparisons in sequential-move games" (joint work with Ana Espinola-Arredondo), we examine a tractable theoretical model in which every individual compares other players' actions with respect to their foregone choices. We analyze the equilibrium prediction in complete information sequential-move games, and compare it with that of standard games where players are not concerned about unchosen alternatives. We show that, without relying on interpersonal payoff comparisons (i.e., assuming strictly individualistic preferences), our model predicts higher cooperation among the players than standard game-theoretic models. In addition, our framework embodies different behavioral models, such as those on social status acquisition as special cases. Finally, we confirm our results in different economic applications.In "Social comparisons as a cooperating device in simultaneous-move games", I extend the above setting to simultaneous-move games. Specifically, I identify under what conditions introducing relative comparisons into players' preferences leads them to be more cooperative than in standard game-theoretic models. I show that this result holds under certain conditions on the reference point that players use in their relative comparisons (which determines when a particular action by other agent is considered kind or not) and on whether players' actions become more strategic complementary or substitutable. The model is then applied to different examples in public good games which confirm the intuition behind the results.Finally, in "Competition for status acquisition in public good games" I apply the above models of social comparisons to the context of status acquisition through contributions to public goods. I show that the simultaneous contribution order generates higher total contributions than the sequential mechanism only when donors are sufficiently homogeneous in the value they assign to status. Otherwise, the sequential mechanism generates the highest contributions