Behavioral Properties of Correlated Equilibrium;
Social Group Structures with Conformity and Stereotyping
Working Paper No. 08-W14
Edward Cartwright and Myrna Wooders
ABSTRACT [article]
We explore the potential for correlated equilibrium to capture
conformity to norms and the coordination of behavior within social
groups. Given a partition of players into social groups we propose
properties that one may expect of a correlated equilibrium: within-group
anonymity, group independence, predictable group behavior and
stereotyped beliefs. We then demonstrate that (a) a correlated
equilibrium satisfying these properties exists in games with many
players (b) a player who stereotypes other players cannot do better with
correct beliefs and (c) correlation allows predictability of group
behavior, which ensures that a correlated equilibrium is approximately
ex-post stable.
Keywords and Phrases: Non-cooperative games, correlated equilibrium, large games, behavioral conformity, stereotyping, identity, expost stability, group anonymity, group independence, predictable group behavior
JEL Classification Numbers: C72, D7, D71