| This dissertation studies three phenomena: the inefficient outcomes observed in many negotiations, altruistic and spiteful behaviors observed in laboratory experiments, and the formation of moral codes as a way to sustain cooperation in many social interactions.; Chapter 1 provides a game-theoretic explanation for delays and gradual concessions in negotiations. The negotiation is modeled as a two-party alternating-offers procedure. The new element in the present analysis is that players may have history-dependent preferences. Specifically, a player compares the discounted utility of a current offer with that of the best offer, in terms of its discounted utility, that he has earlier rejected. I characterize the essentially unique subgame perfect equilibrium path, and show that it entails delay and gradual concessions. As players become infinitely patient, the efficiency loss increases to 50% and the equilibrium division converges to the Nash bargaining solution. I generalize the model to allow for heterogeneous players and weak forms of history dependence.; Chapter 2 investigates whether certain findings from laboratory experiments, seemingly at odds with game theoretic predictions, are compatible with sequential equilibrium when the interaction is viewed as a game of incomplete information. Players are either altruistic or spiteful towards each other, and their altruism or spite depends on their beliefs about others' altruism or spitefulness. Under these assumptions, ultimatum game becomes a signaling game in which the proposer signals his degree of altruism/spite by way of the offer made. I establish existence of sequential equilibria and provide comparative static results that qualitatively corroborate well-known experimental findings.; Chapter 3 explores the role and stability of moral codes for cooperation in social interactions. Combining ideas from evolutionary biology with noncooperative game theory, I model social interactions as infinitely repeated prisoners' dilemma games played in a large population by way of random matching. A moral code classifies individuals as "good" or "bad" on the basis of their behavior. In such a setting, I analyze the relationship between evolutionary stability and sequential equilibrium under different moral codes. Cooperation may be sustained by certain moral codes, but only some codes are immune to pairwise manipulations. |
