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Disclosure of Belief-Dependent Preferences in a Trust Game

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  • Giuseppe Attanasi
  • Pierpaolo Battigalli
  • Rosemarie Nagel

Abstract

We study behavior in a trust game, assuming that the truster is self-interested and the trustee has belief-dependent preferences given by a combination of guilt aversion and intention-based reciprocity. We propose a parametrized representation of such preferences, derive solutions for the corresponding psychological game with complete information about preferences, and offer a qualitative analysis of the incomplete information case. We test our theoretical predictions in a laboratory experiment where the trustee’s belief-dependent preferences are elicited through a structured questionnaire. In the control treatment, the answers are not disclosed to the co-player. In the main treatment, these answers are made common knowledge within the matched pair. According to our main auxiliary assumption, the treatment with disclosure approximately implements a psychological game with complete information. We find that guilt aversion is the prevalent psychological motivation, and that the trustee’s propensity to share is indeed increasing with guilt aversion. Furthermore, behavior and elicited beliefs move in the direction predicted by the theory. Specifically, in the treatment with disclosure, we find a polarization of behavior and beliefs, with more trust and sharing in matched pairs with an elicited high-guilt trustee. High-guilt trustees are less cooperative in the control treatment, where a higher frequency of intermediate beliefs is also found. JEL classification: C72, C91, D03. Keywords: Experiments, psychological games, trust game, guilt, reciprocity, incomplete and complete information.

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Bibliographic Info

Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 506.

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Date of creation: 2013
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Handle: RePEc:igi:igierp:506

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  1. ATTANASI Giuseppe & NAGEL Rosemarie, 2008. "A Survey of Psychological Games: Theoretical Findings and Experimental Evidence," LERNA Working Papers, LERNA, University of Toulouse 08.07.251, LERNA, University of Toulouse.
  2. Armin Falk & Ernst Fehr & Urs Fischbacher, . "Testing Theories of Fairness - Intentions Matter," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 063, Institute for Empirical Research in Economics - University of Zurich.
  3. Luca Stanca & Luigino Bruni & Luca Corazzini, 2007. "Testing Theories of Reciprocity: Do Motivations Matter?," Working Papers, University of Milano-Bicocca, Department of Economics 109, University of Milano-Bicocca, Department of Economics, revised 2007.
  4. Kiryl Khalmetski & Axel Ockenfels & Peter Werner, 2013. "Surprising Gifts - Theory and Laboratory Evidence," Working Paper Series in Economics, University of Cologne, Department of Economics 61, University of Cologne, Department of Economics.
  5. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, American Economic Association, vol. 83(5), pages 1281-1302, December.
  6. Christoph Vanberg, 2008. "Why Do People Keep Their Promises? An Experimental Test of Two Explanations -super-1," Econometrica, Econometric Society, Econometric Society, vol. 76(6), pages 1467-1480, November.
  7. Gerardo A. Guerra & Daniel John Zizzo, 2002. "Trust Responsiveness and Beliefs," Economics Series Working Papers, University of Oxford, Department of Economics 99, University of Oxford, Department of Economics.
  8. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, Elsevier, vol. 46(2), pages 260-281, February.
  9. Giuseppe Attanasi & Pierpaolo Battigalli & Elena Manzoni, 2013. "Incomplete Information Models of Guilt Aversion in the Trust Game," Working Papers, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University 480, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  10. Charles Bellemare & Alexander Sebald & Martin Strobel, 2011. "Measuring the willingness to pay to avoid guilt: estimation using equilibrium and stated belief models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 26(3), pages 437-453, 04.
  11. Dufwenberg, Martin, 2002. "Marital investments, time consistency and emotions," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 48(1), pages 57-69, May.
  12. Camelia M. Kuhnen & Agnieszka Tymula, 2012. "Feedback, Self-Esteem, and Performance in Organizations," Management Science, INFORMS, INFORMS, vol. 58(1), pages 94-113, January.
  13. Michael Bacharach & Gerardo Guerra & Daniel Zizzo, 2007. "The Self-Fulfilling Property of Trust: An Experimental Study," Theory and Decision, Springer, Springer, vol. 63(4), pages 349-388, December.
  14. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, Elsevier, vol. 10(1), pages 122-142, July.
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Cited by:
  1. Giuseppe Attanasi & Pierpaolo Battigalli & Elena Manzoni, 2013. "Incomplete Information Models of Guilt Aversion in the Trust Game," Working Papers, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University 480, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

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