A Theory of Reciprocity with Incomplete Information
A model of belief dependent preferences in finite multi-stage games with observable actions isproposed. It combines two dissimilar approaches: incomplete information (Levine, 1998) andintentionality (Dufwenberg and Kirchsteiger, 2004; Falk and Fischbacher, 2006). Incompleteinformation is important because social preferences are not directly observable; intentions arefound to be indispensable in explaining behavior in games (Falk, Fehr, and Fischbacher, 2008). Inthe model it is assumed that the players have social attitudes that define their socialpreferences. In addition, players care differently about the payoffs of other players depending ontheir beliefs about their social attitude and possibly on the beliefs of higher orders. As thegame unfolds players update their beliefs about the types of other players. An action of a playershows intention when she chooses it anticipating future belief updating by others. A reasoningprocedure is proposed that allows players to understand how to update beliefs by constructing asequence of logical implications.
|Date of creation:||2012|
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- Dufwenberg, M. & Kirchsteiger, G., 1998.
"A Theory of Sequential Reciprocity,"
1998-37, Tilburg University, Center for Economic Research.
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IEW - Working Papers
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Experimental Economics Center Working Paper Series
2006-05, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
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IEW - Working Papers
040, Institute for Empirical Research in Economics - University of Zurich.
- Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
- Ernst Fehr & Simon Gaechter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," CESifo Working Paper Series 336, CESifo Group Munich.
- Kerwin Kofi Charles & Erik Hurst & Nikolai Roussanov, 2009. "Conspicuous Consumption and Race," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 425-467.
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