What Is True Halving in the Payoff Matrix of Game Theory?

Abstract

In game theory, there are two social interpretations of rewards (payoffs) for decision-making strategies: (1) the interpretation based on the utility criterion derived from expected utility theory and (2) the interpretation based on the quantitative criterion (amount of gain) derived from validity in the empirical context. A dynamic decision theory has recently been developed in which dynamic utility is a conditional (state) variable that is a function of the current wealth of a decision maker. We applied dynamic utility to the equal division in dove-dove contests in the hawk-dove game. Our results indicate that under the utility criterion, the half-share of utility becomes proportional to a player's current wealth. Our results are consistent with studies of the sense of fairness in animals, which indicate that the quantitative criterion has greater validity than the utility criterion. We also find that traditional analyses of repeated games must be reevaluated.