UNIVERSITY OF CALIFORNIA, IRVINE, GAME THEORY AND POLITICS 2, POL SCI 130B, 67130

UNIVERSITY OF CALIFORNIA, IRVINE, GAME THEORY AND POLITICS 2, POL SCI 130B, 67130 Lecture 2.3: DECISION-MAKING UNDER RISK Question for today: Since preferences are useless for representing choices under risk, what can we do in order to represent such choices meaningfully? Please list a few meaningful choices in your life: ____________________________________________________ ____________________________________________________ ____________________________________________________ ____________________________________________________ Everything that matters in our lives is a lottery!

CASE STUDY: ENFORCEMENT OF PRISON NORMS OF “DIRTY PHYSIOLOGY” • Farting • Defecation • Urination • Masturbation Main rule: Separation in time from eating Question: How to detect norm-breakers?

THE FARTING DILEMMA WHAT WOULD YOU DO? Note: S - skunk; O - odorless; H - herald; U - go undercover. The “bad smell” factor is normalized at -1; “shame” factor is b≥0; “sanction” for detection of going undercover is s>0 and the probability of detection of going undercover p>0.

THE FARTING DILEMMA (utility-maximizing decision) HERALD if and only if b ≤ qps ROOKIE OLD INMATE parameter big shame b small small sanction s big small detection prob p big small prob of skunk q big ROOKIE always goes undercover OLD INMATE always heralds

UNIVERSITY OF CALIFORNIA, IRVINE, GAME THEORY AND POLITICS 2, POL SCI 130B, 67130

UNIVERSITY OF CALIFORNIA, IRVINE, GAME THEORY AND POLITICS 2, POL SCI 130B, 67130

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University of California, Irvine Gifts and Conflict of Interest

ADVANCE PROGRAM University of California Irvine

Andrew J. Lankford University of California, Irvine

University of California Irvine

Peter Jones, University of California, Irvine Anne Jones, University of California, Riverside

Andrew J. Lankford University of California, Irvine

Ross Conner University of California Irvine USA and

Heather A. Horst University of California, Irvine

UCI University of California, Irvine

Hawaii Pacific University and University of California Irvine

University of California Irvine

University of California, Irvine Undergraduate Students

University of California, Irvine University Registrar

University of California, Irvine and San Diego

Deborah Lowe Vandell University of California, Irvine

G. Avolio – University of California, Irvine

ADVANCE PROGRAM University of California Irvine

Martha Mecartney Professor, University of California, Irvine

Getting Grants University of California, Irvine

University of California, Irvine

Elizabeth Losh, University of California, Irvine

University of California Irvine