I'd Rather Stay Stupid: The Advantage of Having Low Utility

Abstract

Motivated by cost of computation in game theory, we explore how changing the utilities of players (changing their complexity costs) affects the outcome of a game. We show that even if we improve a player's utility in every action profile, his payoff in equilibrium might be lower than in the equilibrium before the change. We provide some conditions on games that are sufficient to ensure this does not occur. We then show how this counter-intuitive phenomenon can explain real life phenomena such as free riding, and why this might cause people to give signals indicating that they are not as good as they really are.