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Causality and Self-Signaling in Economic Games

Abstract

Our ability to cooperate is one of the cornerstones of our success as a species, and the story of how humans have been ableto put aside immediate personal gain in favor of a longer view is widely studied. We add to this literature by exploringcertain seemingly irrational behaviors observed in economic games. Modes of cognition such as those reflected in self-signaling theory may serve to explain how the seemingly irrational might sometimes be quite sensible. We elicit thesebehaviors using real-time multiplayer economic games and suggest mechanisms whereby players may incorporate thevalue of receiving certain signals themselves into their utility calculations, thus making for rational behaviorand rationalinferencein cases where it is not obviously so. These phenomena are consistent with a combination of self-signaling and alimit on the direction of inference in time.

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