Knowledge that Transforms

We endogenize preferences using the “indirect evolutionary approach”. Individuals are randomly matched to play a two-person game. Individual (subjective) preferences determine their behaviour and may differ from the actual (objective) pay-offs that determine fitness. Matched individuals may observe the opponents’ preferences perfectly, not at all, or with some in-between probability. When preferences are observable, a stable outcome must be efficient. When they are not observable, a stable outcome must be a Nash equilibrium and all strict equilibria are stable. We show that, for pure-strategy outcomes, these conclusions are robust to allowing almost perfect, and almost no, observability, with the notable exception that inefficient strict equilibria may fail to be stable with any arbitrarily small degree of observability (despite being stable with no observability).

This volume contains the Papers and Proceed ings of the one hundred and nineteenth annual meeting of the American Economic Association.The Proceedings record the business activities of the Association in 2006, the annual membership meetings, and the April (2006) and January (2007) meetings of the Association's officers and committees.The Papers constitute the greater part of the volume.They comprise contributions that fill roughly the same number of pages as one and a half regular issues of the American Economic Review.We will take this opportunity to answer a number of commonly asked questions about the Papers.Who chooses the authors?About a year in advance, the Association's President-elect, acting as program chairman, decides on the topics for which sessions will be organized.This is done after consultation and comment, both volunteered and solicited, from a wide range of individuals.(A Call for Papers appears in the summer and fall issues of the Journal of Economic Perspectives.)The President-elect invites some sessions and, with the help of a Program Committee, selects most of the sessions from the proposals received.Each session organizer in turn invites several persons (usually three or four) to give papers on the theme of the session and asks others to give comments on the papers.The program chairman decides at the time of organization which sessions will be included in this volume.Space limitations restrict the number of printed sessions.This year we are printing 28 sessions, although a total of 180 sessions were sponsored, either solely by the American Economic Association or jointly with allied societies.Are discussants' comments published?Comments and discussions usually are not published.For all sessions, names and affiliations of commentators are printed at the start of each session, permitting readers especially interested in particular comments to write to the commentator for a copy of the discussion.