Dynamic restriction of choices: Synthesis of societal rules

Abstract

We study a game model to highlight the mutual recursiveness of individual rationality and societal rationality. These are games that change intrinsically based on the actions / strategies played by the players. There is an implicit player - the society, who makes actions available to players and incurs certain costs in doing so. If and when it feels that an action a is being played by a small number of players and/or it becomes too expensive for it to maintain the action a, it removes a from the set of available actions. This results in a change in the game and the players strategise afresh taking this change into account. We study the question: which actions of the players should the society restrict and how should it restrict them so that the social cost is minimised in the eventuality? We address two variations of the question: when the players are maximisers, can society choose an order of their moves so that social cost is minimised, and which actions may be restricted when players play according to given strategy specifications. © 2011 Springer-Verlag.