Subjective expected relative similarity (SERS)

Subjective expected relative similarity (SERS) is a normative and descriptive theory that predicts and explains cooperation levels in a family of games termed Similarity Sensitive Games (SSG), among them the well-known Prisoner's Dilemma game (PD). SERS was originally developed in order to (i) provide a new rational solution to the PD game and (ii) to predict human behavior in single-step PD games. It was further developed to account for: (i) repeated PD games, (ii) evolutionary perspectives and, as mentioned above, (iii) the SSG subgroup of 2x2 games. SERS predicts that individuals cooperate whenever their subjectively perceived similarity with their opponent exceeds a situational index derived from the game’s payoffs, termed the similarity threshold of the game. SERS proposes a solution to the rational paradox associated with the single step PD and provides accurate behavioral predictions.The theory was developed by Prof. Ilan Fischer at the University of Haifa.

     The dilemma is described by a 2 x 2 payoff matrix that allows each player to choose between a cooperative and a competitive (or defective) move. If both players cooperate, each player obtains the reward (R) payoff. If both defect, each player obtains the punishment (P) payoff. However, if one player defects while the other cooperates, the defector obtains the temptation (T) payoff and the cooperator obtains the sucker’s (S) payoff, where
T > R > P > S (and, R ≥ T+S/2 assuring that sharing the payoffs awarded for uncoordinated choices does not exceed the payoffs obtained by mutual cooperation).

Given the payoff structure of the game (see Table 1), each individual player has a dominant strategy of defection. This dominant strategy yields a better payoff regardless of the opponent’s choice. By choosing to defect, players protect themselves from exploitation and retain the option to exploit a trusting opponent. Because this is the case for both players, mutual defection is the only Nash equilibrium of the game. However, this is a deficient equilibrium (since mutual cooperation results in a better payoff for both players).

The PD game payoff matrix:

Table 1:Payoffs are denoted as temptation (T), reward (R), punishment (P) and sucker (S)

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