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A representation theorem for guilt aversion

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  • Jensen, Martin Kaae
  • Kozlovskaya, Maria

Abstract

Guilt aversion has been shown to play an important role in economic decision-making. In this paper, we take an axiomatic approach to guilt by deducing a utility representation from a list of easily interpretable assumptions on an agent's preferences. It turns out that our logarithmic representation can mitigate the problem of multiplicity of equilibria to which psychological games are prone. We apply the model in three well-known games and show that its predictions are consistent with experimental observations.

Suggested Citation

  • Jensen, Martin Kaae & Kozlovskaya, Maria, 2016. "A representation theorem for guilt aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 148-161.
  • Handle: RePEc:eee:jeborg:v:125:y:2016:i:c:p:148-161
    DOI: 10.1016/j.jebo.2016.02.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Guilt aversion; Utility representation; Psychological games;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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