Game Theorist of Behavioural Economics

Matthew Rabin (born 1972, in the United States) is a prominent behavioral economist known for his contributions to understanding the ways in which psychological factors influence economic decision-making, particularly regarding issues like fairness, risk preferences, and intertemporal choices. Rabin’s work significantly advanced the understanding of how individuals’ social preferences (e.g., fairness and altruism) affect their economic behavior, especially when those preferences diverge from the predictions of traditional economic models based on rational decision-making.

One of his most influential ideas is the “fairness theory”, which explores how individuals incorporate concerns for fairness into their economic decisions, even when those decisions might come at a personal cost. He is known for his groundbreaking 1993 paper, “Incorporating Fairness into Game Theory and Economics”, where he introduced a model that demonstrated how fairness considerations could explain behavioral anomalies in economics, such as why people may reject offers in the ultimatum game that are objectively advantageous to them.

Another key work of Rabin’s is his “model of reciprocity”, which shows how fairness and the expectation of reciprocal behavior can influence cooperation in games and social exchanges. He has also contributed to the understanding of imperfect information and how expectations can shape economic outcomes in the real world, especially in market settings.

Rabin completed his undergraduate studies at Harvard University and earned his Ph.D. from MIT. He is currently a professor at Harvard University and has contributed significantly to both theory and policy in the realm of behavioral economics.

His major works include the papers “A Model of Fairness and Reciprocity” (1993) and “Incorporating Fairness into Economics and Game Theory”. Rabin’s work has had significant implications for public policy, especially in terms of understanding how behavioral biases can affect decisions in areas such as taxation, welfare programs, and corporate governance.