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Public Goods Games and Psychological Utility: Theory and Evidence

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  • Sanjit Dhami
  • Mengxing Wei
  • Ali al-Nowaihi

Abstract

We consider a theoretical model of a public goods game that incorporates reciprocity, guilt-aversion/surprise-seeking, and the attribution of intentions behind these emotions. In order to test our predictions, we implement the ‘induced beliefs method’ and a within-subjects design, using the strategy method. We find that all our psychological variables contribute towards the explanation of contributions. Guilt-aversion is pervasive at the individual-level and the aggregate-level and it is relatively more important than surprise-seeking. Our between-subjects analysis confirms the results of the within-subjects design.

Suggested Citation

  • Sanjit Dhami & Mengxing Wei & Ali al-Nowaihi, 2018. "Public Goods Games and Psychological Utility: Theory and Evidence," CESifo Working Paper Series 7014, CESifo.
    • Handle: RePEc:ces:ceswps:_7014
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    Citations

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    Cited by:

    1. Attanasi, Giuseppe & Rimbaud, Claire & Villeval, Marie Claire, 2019. "Embezzlement and guilt aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 409-429.
    2. Giovanni Di Bartolomeo & Martin Dufwenberg & Stefano Papa & Laura Razzolini, 2022. "Guilt Aversion: Eve versus Adam," Working Papers in Public Economics 220, Department of Economics and Law, Sapienza University of Roma.
    3. Sanjit Dhami & Emma Manifold & Ali al‐Nowaihi, 2021. "Identity and Redistribution: Theory and Evidence," Economica, London School of Economics and Political Science, vol. 88(350), pages 499-531, April.
    4. Kozlovskaya, Maria & Nicoló, Antonio, 2019. "Public good provision mechanisms and reciprocity," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 235-244.
    5. Dhami, Sanjit & Arshad, Junaid & al-Nowaihi, Ali, 2022. "Psychological and social motivations in microfinance contracts: Theory and evidence," Journal of Development Economics, Elsevier, vol. 158(C).
    6. Pierpaolo Battigalli & Martin Dufwenberg, 2022. "Belief-Dependent Motivations and Psychological Game Theory," Journal of Economic Literature, American Economic Association, vol. 60(3), pages 833-882, September.
    7. Beinhocker, Eric & Dhami, Sanjit, 2019. "The Behavioral Foundations of New Economic Thinking," INET Oxford Working Papers 2019-13, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    8. Khalmetski, Kiryl, 2019. "Evasion of guilt in expert advice," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 296-310.
    9. Sanjit Dhami & Mengxing Wei, 2023. "Norms, Emotions, and Culture in Human Cooperation and Punishment: Theory and Evidence," CESifo Working Paper Series 10220, CESifo.
    10. Dhami, Sanjit & Wei, Mengxing & Mamidi, Pavan, 2024. "Religious identity, trust, reciprocity, and prosociality: Theory and evidence," Journal of Development Economics, Elsevier, vol. 166(C).
    11. Attanasi, Giuseppe & Rimbaud, Claire & Villeval, Marie Claire, 2023. "Guilt aversion in (new) games: Does partners' payoff vulnerability matter?," Games and Economic Behavior, Elsevier, vol. 142(C), pages 690-717.
    12. repec:hal:wpaper:halshs-03620418 is not listed on IDEAS
    13. Sanjit Dhami & Mengxing Wei, 2024. "The Incentive Compatibility Condition, Firm Culture, and Social Norms under Moral Hazard: Theory and Evidence," CESifo Working Paper Series 11371, CESifo.
    14. Dhami, Sanjit & Wei, Mengxing & al-Nowaihi, Ali, 2023. "Classical and belief-based gift exchange models: Theory and evidence," Games and Economic Behavior, Elsevier, vol. 138(C), pages 171-196.
    15. Patel, Amrish & Smith, Alec, 2019. "Guilt and participation," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 279-295.
    16. Peeters, Ronald & Vorsatz, Marc, 2021. "Simple guilt and cooperation," Journal of Economic Psychology, Elsevier, vol. 82(C).
    17. Sanjit Dhami, 2017. "Human Ethics and Virtues: Rethinking the Homo-Economicus Model," CESifo Working Paper Series 6836, CESifo.
    18. Caria, A. Stefano & Fafchamps, Marcel, 2019. "Expectations, network centrality, and public good contributions: Experimental evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 391-408.
    19. Amrish Patel & Alec Smith, 2018. "Guilt and participation," University of East Anglia School of Economics Working Paper Series 2018-01, School of Economics, University of East Anglia, Norwich, UK..
    20. Cartwright, Edward, 2019. "A survey of belief-based guilt aversion in trust and dictator games," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 430-444.

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    More about this item

    Keywords

    public goods games; psychological game theory; reciprocity; surprise-seeking; guilt-aversion; attribution of intentions; induced beliefs method; within and between subjects designs;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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