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Incorporating Belief-Dependent Motivation in Games

Author

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  • Pierpaolo Battigalli
  • Roberto Corrao
  • Martin Dufwenberg

Abstract

Psychological game theory (PGT), introduced by Geanakoplos, Pearce & Stacchetti (1989) and signi cantly generalized by Battigalli & Dufwenberg (2009), extends the standard game theoretic framework by letting playersutility at endnodes depend on their interactive beliefs. While it is understood that a host of applications that model and/or test the role of emotional and other psychological forces nd their home in PGT, the framework is abstract and comprises complex mathematical objects, such as playersin nite hierarchies of beliefs. Thus, PGT provides little guidance on how to model speci c belief-dependent motivations and use them in game theoretic analysis. This paper takes steps to fi ll this gap. Some aspects are simplifi ed e.g., which beliefs matter but others are refi ned and brought closer to applications by providing more structure. We start with belief-dependent motivations and show how to embed them in game forms to obtain psychological games. We emphasize the role of time and of the perception of players' intentions. We take advantage of progress made on the foundations of game theory to expand and improve on PGT solution concepts. JEL classi fication: C72; C73; D81; D82; D92Keywords: Psychological game theory; Belief-dependent motivation; Intentions; Time; Rationalizability; Self-confi rming equilibrium; Bayesian sequential equilibrium

Suggested Citation

  • Pierpaolo Battigalli & Roberto Corrao & Martin Dufwenberg, 2019. "Incorporating Belief-Dependent Motivation in Games," Working Papers 642, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  • Handle: RePEc:igi:igierp:642
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    References listed on IDEAS

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    Cited by:

    1. Sanjit Dhami & Junaid Arshad & Ali al-Nowaihi, 2019. "Psychological and Social Motivations in Microfinance Contracts: Theory and Evidence," CESifo Working Paper Series 7773, CESifo Group Munich.
    2. M. Bigoni & S. Bortolotti & E. Nas Özen, 2019. "Economic Polarization and Antisocial Behavior: an experiment," Working Papers wp1133, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. repec:eee:gamebe:v:117:y:2019:i:c:p:15-39 is not listed on IDEAS

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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