Risk sensitivity and theory of mind in human coordination
Fig 3
Probability of hunting stags in a normal-form stag hunt game.
Cumulative prospect theory can explain a wide range of coordinating behaviors in a simple game such as the stag hunt, depending on how probabilities are perceived and how outcomes are framed. The panels show the probability of choosing Stag in the stag hunt normal-form game, for pairs of parameters of prospect theory—i.e., reference point b, Prelec parameter α, loss aversion λ, and utility concavity γ. For each pair of parameters, the remaining ones were left at default values: b = 0, α = 1, λ = 1, and γ = 1. Lighter colors indicate higher probability of hunting stag. White line represents the mixed Nash equilibrium of 1/3.