Shame in two-stage choice problems with interdependent alternatives

Shun Okuhara, Rafik Hadfi, Takayuki Ito

Abstract: Decision-makers have to reason about the fairness of their choices when other parties are involved. This situation has called for the use of preference models that could codify notions like selfishness, fairness, and altruism. There are cases of problems where the decision-maker’s partners have interdependent preferences about the available alternatives. This gives rise to multiple forms of influence between all the partners. In this preliminary study, we propose a canonical case for this problem with subordinate and independent alternatives. We show how probabilistic dependency could influence the fairness and private payoffs of the decision-maker.