Personal Features Affect Strategic Behaviour

People’s unique traits are their stable cognitive and psychological features, such as tastes, skills, cognitive abilities, attitudes toward uncertainty and ambiguity, concerns for others, and the extent to which they are affected by emotions. The formal description of the rules of a game should be independent of the personal features of those who happen to play the game and vice versa. This is the key methodological tenet underlying the TRAITS-GAMES project by Pierpaolo Battigalli, of Bocconi’s Department of Decision Sciences, which has been awarded an €1.8m Advanced Grant by the European Research Council. This is the second ERC grant won by Prof Battigalli and the 61st won by Bocconi.
 
The branch of microeconomics known as game theory is the study of mathematical models describing how rational parties interact strategically within a set of rules. The groundwork of game theory as we know it was established by Hungarian-American polymath John von Neumann in the 1940s and the discipline has evolved considerably since then, encompassing the study of different types of games, the role of information, the relationship between players and many other variables.
 
Pierpaolo Battigalli, however, argues that there is a fundamental flaw in the current methodological architecture which seriously limits the applicability of game theory to the real world. What researchers have so far failed to develop is a general language to describe the rules of the game separately from the players’ traits (cognitive, psychological, etc.). To overcome this obstacle, Prof Battigalli has proposed what he calls “separation principle”: the formal description of the rules of the game should be independent of the personal features of those who happen to play the game. Similarly, he argues that personal characteristics must be described independently of the decision context (for example, a game) in which people are operating.
 
The TRAITS-GAMES project will therefore start by investigating how different cognitive abilities, such as memory, attention, and problem-solving skills, influence players' strategies and outcomes in various game settings. Another aspect is that varying levels of cognitive abilities, attitudes towards uncertainty, and beliefs about others' traits influence the effectiveness and sustainability of institutional arrangements and agreements. Individuals' beliefs about others' traits and belief change as the play unfolds might shape their willingness to cooperate and stick to agreements.
 
“Social norms, cultural influences, and situational cues interact with internal cognitive traits to shape individuals' motivations in strategic interactions. How do individuals' motivations evolve over time and across different game environments?” asks Pierpaolo Battigalli, who adds: “Is it possible to develop formal models that capture the dynamic nature of context-dependent motivations? These are important questions that I want to investigate.”
 
ERC Advanced Grants are for established researchers who have a track-record of significant research achievements, and an excellent proposal. For researchers in the earlier stages of their careers, ERC provides Starting Grants and Consolidator Grants.
 

Source: Knowledge Bocconi