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Incomplete Information Models of Guilt Aversion in the Trust Game

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  • Giuseppe Attanasi
  • Pierpaolo Battigalli
  • Elena Manzoni

Abstract

In the theory of psychological games it is assumed that players' preferences on material consequences depend on endogenous beliefs. Most of the applications of this theoretical framework assume that the psychological utility functions representing such preferences are common knowledge. But this is often unrealistic. In particular, it cannot be true in experimental games where players are subjects drawn at random from a population. Therefore an incomplete-information methodology is called for. We take a first step in this direction, focusing on models of guilt aversion in the Trust Game. We consider two alternative modeling assumptions: (i) guilt aversion depends on the role played in the game, because only the trustee can feel guilt for letting the co-player down, (ii) guilt aversion is independent of the role played in the game. We show how the set of Bayesian equilibria changes as the upper bound on guilt sensitivity varies, and we compare this with the complete-information case. Our analysis illustrates the incomplete-information approach to psychological games and can help organize experimental results in the Trust Game.

Suggested Citation

  • Giuseppe Attanasi & Pierpaolo Battigalli & Elena Manzoni, 2013. "Incomplete Information Models of Guilt Aversion in the Trust Game," Working Papers 246, University of Milano-Bicocca, Department of Economics, revised Jun 2013.
  • Handle: RePEc:mib:wpaper:246
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Giuseppe Attanasi & Pierpaolo Battigalli & Rosemarie Nagel, 2013. "Disclosure of Belief-Dependent Preferences in a Trust Game," Working Papers 506, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    2. Anderlini, Luca & Terlizzese, Daniele, 2017. "Equilibrium trust," Games and Economic Behavior, Elsevier, vol. 102(C), pages 624-644.
    3. Giuseppe Attanasi & Claire Rimbaud & Marie Claire Villeval, 2018. "Embezzlement and Guilt Aversion," Working Papers 1807, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    4. repec:spr:inrvec:v:65:y:2018:i:2:d:10.1007_s12232-017-0286-3 is not listed on IDEAS
    5. repec:kap:expeco:v:21:y:2018:i:2:d:10.1007_s10683-017-9543-2 is not listed on IDEAS
    6. De Marco Giuseppe & Immordino Giovanni, 2014. "Reciprocity in the Principal–Multiple Agent Model," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 14(1), pages 1-38, January.
    7. Giuseppe Attanasi & Pierpaolo Battigalli & Elena Manzoni & Rosemarie Nagel, 2018. "Belief-dependent Preferences and Reputation: Experimental Analysis of a Repeated Trust Game," Working Papers 622, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    8. Roman Inderst & Kiryl Khalmetski & Axel Ockenfels, 2017. "Sharing Guilt," Working Paper Series in Economics 90, University of Cologne, Department of Economics.
    9. Charles Bellemare & Alexander Sebald & Sigrid Suetens, 2018. "Heterogeneous guilt sensitivities and incentive effects," Experimental Economics, Springer;Economic Science Association, vol. 21(2), pages 316-336, June.
    10. Giuseppe Attanasi & Aurora García-Gallego & Nikolaos Georgantzís & Aldo Montesano, 2015. "Bargaining over Strategies of Non-Cooperative Games," Games, MDPI, Open Access Journal, vol. 6(3), pages 1-26, August.
    11. Pierpaolo Battigalli & Martin Dufwenberg & Alec Smith, 2015. "Frustration and Anger in Games," CESifo Working Paper Series 5258, CESifo Group Munich.
    12. David Ong & Chun-Lei Yang, 2014. "Pro Bono Work and Trust in Expert Fields," CESifo Working Paper Series 4897, CESifo Group Munich.
    13. repec:eee:jeborg:v:137:y:2017:i:c:p:132-144 is not listed on IDEAS
    14. Attanasi, Giuseppe & Rimbaud, Claire & Villeval, Marie Claire, 2018. "Embezzlement and Guilt Aversion," IZA Discussion Papers 11956, Institute for the Study of Labor (IZA).
    15. Eric Cardella, 2016. "Exploiting the guilt aversion of others: do agents do it and is it effective?," Theory and Decision, Springer, vol. 80(4), pages 523-560, April.

    More about this item

    Keywords

    Psychological games; Trust Game; guilt; incomplete information;

    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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