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Intentions and Social Interactions

  • J. Atsu Amegashie

    ()

    (Department of Economics, University of Guelph)

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    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 non-psychological game under incomplete information. I then modify the game as a standard psychological game in the sense of Geanakoplos, Pearce and Stacchetti (Games and Economic Behavior, 1989) and Rabin (American Economic Review, 1993). I find a complex social interaction in the dynamic psychological equilibrium under incomplete information. In particular, a player may stick to a strategy of accepting every invitation with the goal of discouraging insincere invitations, while in the nonpsychological game this strategy is employed because all invitations are sincere. 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 University of Guelph, Department of Economics and Finance in its series Working Papers with number 0602.

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    Length: 21 pages
    Date of creation: 2006
    Date of revision:
    Handle: RePEc:gue:guelph:2006-2
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    Web page: https://www.uoguelph.ca/economics/
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    1. Markus K. Brunnermeier & Jonathan A. Parker, 2002. "Optimal expectations," LSE Research Online Documents on Economics 24954, London School of Economics and Political Science, LSE Library.
    2. Gilboa, Itzhak & Schmeidler, David, 1988. "Information dependent games : Can common sense be common knowledge?," Economics Letters, Elsevier, vol. 27(3), pages 215-221.
    3. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
    4. Werlang, Sérgio Ribeiro da Costa, 1988. "Common knowledge," Economics Working Papers (Ensaios Economicos da EPGE) 118, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    5. Eyster, Erik & Rabin, Matt, 2002. "Cursed Equilibrium," Department of Economics, Working Paper Series qt6xf4782t, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Georg Kirchsteiger & Martin Dufwenberg, 2000. "Reciprocity and wage undercutting," ULB Institutional Repository 2013/5905, ULB -- Universite Libre de Bruxelles.
    7. J. Atsu Amegashie, 2006. "Economics, Gratitude, and Warm Glow," Working Papers 0601, University of Guelph, Department of Economics and Finance.
    8. Kolpin, Van, 1992. "Equilibrium refinement in psychological games," Games and Economic Behavior, Elsevier, vol. 4(2), pages 218-231, April.
    9. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
    10. Vincent P. Crawford, 2003. "Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions," American Economic Review, American Economic Association, vol. 93(1), pages 133-149, March.
    11. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
    12. Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-19, June.
    13. Ruffle, Bradley J., 1999. "Gift giving with emotions," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 399-420, July.
    14. Colin F. Camerer & Teck-Hua Ho & Juin-Kuan Chong, 2004. "A Cognitive Hierarchy Model of Games," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 861-898, August.
    15. Dufwenberg, Martin, 2002. "Marital investments, time consistency and emotions," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 57-69, May.
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