Nir Vulkan, Oxford University
Personality Traits and Strategic Behavior: Anxiousness, Aggressiveness and Entry Games
Abstract: Game theory typically ignores players' personalities. The purpose of this paper is to demonstrate that personality predispositions have a systematic effect on the way people engage in strategic behavior.
This paper focuses on two of the facets of the Neuroticism domain: anxiousness and aggressiveness (angry hostility). The choice of anxiousness and aggressiveness provides a particularly interesting contrast. While according to the big 5 model both traits have a mutual origin (high neuroticism), their psychological experience and behavioral implications are very different. While anxiousness creates feelings of fear, worry, uneasiness, and dread (Bouras & Holt, 2007), and promotes behavioral patterns of withdrawal, aggressiveness is associated with approach-behaviors such as risky decisions (Lerner & Keltner, 2001).
We investigate anxiousness and aggressiveness in a 2-player symmetric entry game, where each player can guarantee a certain payoff by staying out, obtains a higher payoff if she is the only player who enters and a lower payoff if both players enter. We selected this game for several reasons.
First, a player in this game has to choose between an avoidance option (stay out), and a risky conflict option (enter), and those options correspond directly to the behavioral implications of the personality traits we wish to investigate, creating opposing predictions regarding players' behavior.
Second, the game is simple and easy to explain and analyze. Finally, the choice of an optimal strategy in the entry game is mainly affected by the player's beliefs regarding the behavior of the others, so it highlights strategic considerations. As such, it is a perfect vessel to look not only at the effect of personality on behavior, but also at the effect of the player's mental model or "theory of mind" of the personality of other players.
We find that (a) players are sensitive to the personality type of the opponents and (b) anxious players are less likely to enter the market, but aggressive player are not more likely to enter the market. However, when the level of anxiousness is help constant, more aggressive players are indeed more likely to enter the market.