In psychological games, higher-order beliefs, emotions, and motives - in addition to actions - affect players’ payoffs. Suppose you are tolerated as opposed to being genuinely accepted by your peers and “friends”. In particular, suppose you are invited to a party, movie, dinner, etc not because your company is desired but because the inviter would feel guilty if she did not invite you. In all of these cases, it is conceivable that the intention behind the action will matter and hence will affect your payoffs. I model intentions in a dynamic psychological game under incomplete information. I find a complex social interaction in this game. In particular, a player may stick to a strategy of accepting every invitation with the goal of discouraging insincere invitations. This may lead one to erroneously infer that this player is eagerly waiting for an invitation, when indeed his behavior is driven more by strategic considerations than by an excessive desire for social acceptance. I discuss how being tolerated but not being truly accepted can explain the rejection of mutually beneficial trades, the choice of identity, social exclusion, marital divorce, and its implication for political correctness and affirmative action.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 1757.
Find related papers by JEL classification: C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology
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Markus K. Brunnermeier & Jonathan A. Parker, 2005.
"Optimal Expectations,"
American Economic Review,
American Economic Association, vol. 95(4), pages 1092-1118, September.
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Other versions:
Markus K. Brunnermeier & Jonathan A. Parker, 2004.
"Optimal Expectations,"
NBER Working Papers
10707, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Markus K. Brunnermeier & Jonathan A. Parker, 2002.
"Optimal Expectations,"
Working Papers
146, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
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