ABSTRACT
Existing models of interactive game-theoretic decision making typically assume that only the attributes of the game need be considered when reaching a decision, i.e., these theories assume that the utility of a strategy is determined by the utility of the outcomes of the game, and transforms of the probabilities of each outcome. The strategic decisions are assumed to be based on these utilities. The two experiments presented here provide strong evidence against these assumptions. We investigated choice and predictions about the choices of other players in Prisoners Dilemma game. The cooperativeness of the games in each condition was varied and the results demonstrate that the average cooperation rate and the predicted cooperation of the other player in each game strongly depended on the cooperativeness of the preceding games, which suggests that games are not considered independently. It is proposed that people have poor notions of absolute cooperativeness, risk, and utility, and instead make their judgments and decisions in relative terms. The proposed accounts for these results are based on existing psychophysical and cognitive theories of perception and judgment of magnitude information.
