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Psychological Games and Sequential Rationality
Abstract
In psychological games the payoff to each player depends not only on what every player does but also on what he thinks every player believes, and on what he thinks they believe others believe, and so on. In equilibrium, beliefs are assumed to correspond to reality. Yet psychological games and psychological equilibria allow one to model belief-dependent emotions such as anger and surprise that are problematic for conventional game theory. We are particularly interested in issues of sequential rationality for psychological games. We show that although backward induction cannot be applied, and “perfect” psychological equilibria may not exist, subgame perfect and sequential equilibria always do exist.
... Considering the latter, the greatest contribution comes from Geanakoplos et al. [1989] (GPS hereinafter) who introduce the concept of psychological game in the context of sequential rationality. With psychological games, they want to consider a player's belief about the other player's beliefs regarding his/her actions. ...
... Hence, Rabin [1993] does not only consider personal beliefs about the other but also material payoffs, summarizing the previous works of Geanakoplos et al. [1989] and Fehr and Schmidt [1999]. In particular, he bases his game on the assumption that each person tries to maximize (minimize) the other material payoff producing an outcome that is a mutual-max (mutual-min). ...
... The two values (b * , R * ) are a mutual-max thus, representing a fairness equilibrium. Moreover, the fairness function is continuous in its domain hence, we can invoke the proof of Geanakoplos et al. [1989] to demonstrate that it is also a Nash Equilibrium. If we consider this game as an extension of the Prisoner's dilemma game we see in Section 3.2, we can also use the Folk Theorem to show that the results achieved are a Subgame Psychological Perfect Equilibrium. ...
This paper aims to briefly present the fairness approach in game theory and its potential application. Fairness means that players consider not only personal payoffs but also others' payoffs and beliefs regarding their actions. In this context, we distinguish two approaches, one based on the material payoff and the other on beliefs. We adopt the fairness approach in proposing three games for studying the strategic interaction between a hypothetical country and the European Union in proposing a debt mutualization scheme. We find that the optimal debt quota to share with the European Union is 50%; concerning the moral hazard problem, commitment to structural reforms for countries with high public debt leads to the best equilibrium, that can be preserved following an incentive strategy.
... As a consequence of this, saying that a player more (respectively, less) altruistically behaves encompasses both the case in which the positive regard for his opponent increases (respectively, decreases) and that in which the negative regard for his opponent decreases (respectively, increases), and this accordingly affects his strategic behavior. approach in [25,24], even if the formal model we propose is completely different. In psychological games, the starting point is that player attitudes toward other players depend on how they feel they are being treated, and this aspect is modelled assuming that the utility of players depends not only on strategies, but also on their beliefs. ...
... The attractor arising from the loss of stability of s * + very quickly grows and as v →∼ 3.2 it tends to collide with the boundary of the basin of attraction of s * −,1 , and hence to disappear. So, even for quite small values of the prize, s * + does not play any economically significant role in the dynamics (we recall that, in agreement with Proposition (25), some trajectories starting with ω 1,0 = ω 2,0 can still converge toward s * + ) and starting from almost any initial condition we have convergence toward the spiteful steady state or the attractor arising when it becomes unstable. The scenario reported in Figure 5 shows that, at least when multiple steady states are present, the spiteful steady state is that dynamically relevant, giving rise to overbidding phenomena even if the players initially have altruistic preferences, especially when the prize increases. ...
... Condition4 φ − (θ) < φ < φ 4 (θ) φ − (θ) < φ < φ 4 (θ) ( if θ = −1, φ > −4) φ − (θ) < φ < φ 4 (θ) and hence (25) has empty solution. So we conclude that s * is unconditionally unstable also for θ > 0. Let us now consider the case of θ ∈ (−2, 0). ...
... Psychological games have been introduced to understand how emotions, opinions and intentions of the decision makers can affect a game. In the pioneering paper by Geanakoplos et al. (1989), this goal is tackled by assuming that players may have belief-dependent motivations. 1 More precisely, in a psychological game, each player's payoff depends on his hierarchy of beliefs; that is, it depends not only on what every player does but also on what he thinks every player believes, on what he thinks every player believes the others believe, and so on. Geanakoplos et al. (1989) present an equilibrium concept for this class of games, based on the idea that the entire hierarchy of beliefs of each player must be correct in equilibrium; moreover, they provide an existence result for this notion of equilibrium. ...
... In the pioneering paper by Geanakoplos et al. (1989), this goal is tackled by assuming that players may have belief-dependent motivations. 1 More precisely, in a psychological game, each player's payoff depends on his hierarchy of beliefs; that is, it depends not only on what every player does but also on what he thinks every player believes, on what he thinks every player believes the others believe, and so on. Geanakoplos et al. (1989) present an equilibrium concept for this class of games, based on the idea that the entire hierarchy of beliefs of each player must be correct in equilibrium; moreover, they provide an existence result for this notion of equilibrium. ...
... This is the key motivation of the present work; we combine these two relevant aspects of strategic interactions: psychological payoffs and ambiguous beliefs. More precisely, we look at the issue of ambiguity in the framework of psychological games by taking into account ambiguous hierarchies of beliefs and adapting the model of psychological games of Geanakoplos et al. (1989) to the ambiguity framework. The idea is that beliefs might be ambiguous (or imprecise) in equilibrium. ...
Psychological games aim to represent situations in which players may have belief-dependent motivations. In this setting, utility functions are directly dependent on the entire hierarchy of beliefs of each player. On the other hand, the literature on strategic ambiguity in classical games highlights that players may have ambiguous (or imprecise) beliefs about opponents’ strategy choices. In this paper, we look at the issue of ambiguity in the framework of simultaneous psychological games by taking into account ambiguous hierarchies of beliefs and study a natural generalization of the psychological Nash equilibrium concept to this framework. We give an existence result for this new concept of equilibrium and provide examples that show that even an infinitesimal amount of ambiguity may alter significantly the equilibria of the game or can work as an equilibrium selection device. Finally, we look at the problem of stability of psychological equilibria with respect to ambiguous trembles on the entire hierarchy of correct beliefs and we provide a limit result that gives conditions so that sequences of psychological equilibria under ambiguous perturbation converge to psychological equilibria of the unperturbed game.
... In this section, we go beyond moral preferences and consider settings where moral considerations do not arise, but we still have language dependence. We focus on language-based games (Bjorndahl, Halpern and Pass, 2013), which are a generalization of psychological games (Geanakoplos, Pearce and Stacchetti, 1989;Battigalli and Dufwenberg, 2009). ...
... The language implicitly used by psychological game theory is rich in one sense-it allows a continuum of possible beliefs-but is poor in the sense that it talks only about belief. That said, as shown by Geanakoplos, Pearce and Stacchetti (1989) and Battigalli and Dufwenberg (2009), many human emotions, including disappointment, the desire to reciprocate, guilt, regret, and frustration, can be expressed naturally using beliefs, as can reference-dependent preferences (Kőszegi and Rabin, 2006), where an agent compares the actual outcome to what was expected. The following example illustrates some of these issues. ...
We review the literature on models that try to explain human behavior in social interactions described by normal-form games with monetary payoffs. We start by covering social and moral preferences. We then focus on the growing body of research showing that people react to the language with which actions are described, especially when it activates moral concerns. We conclude by arguing that behavioral economics is in the midst of a paradigm shift toward language-based preferences, which will require an exploration of new models and experimental setups.(JEL C70, C90, D11, D90, Z13)
... In this paper, we develop a formal model of anger and political conflict, utilizing psychological game theory (Battigalli and Dufwenberg 2009;Geanakoplos, Pearce, and Stacchetti 1989). We enhance the "conflict cycles" model of Acemoglu and Wolitzky (2014) with insights from psychological research on anger, emphasizing a cognitive appraisal approach where agents become angered due to negative outcomes they attribute to others' intentional actions (Frijda 1993;Lazarus 1991;Roseman 1996;Scherer 1999;Zajonc 2000). ...
... Building on work by Scherer (1988) and Battigalli and Dufwenberg (2009), we posit that negative outcomes are those falling short of expectations, fostering stronger reactions when trust is breached, thus creating endogenous preferences. This approach situates our theory firmly within the psychological game theory field (Battigalli and Dufwenberg 2009;Geanakoplos, Pearce, and Stacchetti 1989). In our model, anger motivates actors to seek punitive actions, deriving psychological satisfaction not just from their gains but from the losses inflicted on others, a phenomenon backed by empirical studies (García-Ponce, Young, and Zeitzoff 2023;Haidt 2003;Johnson 2009;Wayne 2023). ...
Emotions shape strategic conflict dynamics. However, the precise way in which strategic and emotional concerns interact to affect international cooperation and contention are not well understood. We propose a model of intergroup conflict under incomplete information in which agents are sensitive to psychological motivations in the form of anger. Agents become angry in response to worse-than-expected outcomes due to actions of other players. Aggression may be motivated by anger or by beliefs about preferences of members of the other group. Increasing one group’s sensitivity to anger makes that group more aggressive but reduces learning about preferences, which makes the other group less aggressive in response to bad outcomes. Thus, anger has competing effects on the likelihood of conflict. The results have important implications for understanding the complex role of anger in international relations and, more generally, the interplay between psychological and material aims in both fomenting and ameliorating conflict.
... Moreover, the integration of psychology and beliefs into game theory has led to significant advancements in understanding economic behavior. Geanakoplos, Pearce & Stacchetti (1989) emphasize the importance of incorporating belief-dependent emotions and expectations in strategic settings. This approach allows for modeling how individuals' payoffs are influenced not only by their own actions but also by their beliefs about what others believe. ...
... This emphasis on psychology and high-order beliefs in game theory reflects the growing recognition of the role these factors play in decision-making processes, providing valuable insights into economic behavior and outcomes. Geanakoplos, Pearce & Stacchetti's (1989) contribution not only serves theoretical modeling, but also reflects a phenomenon observed in various economic scenarios that can potentially serve as a tool for solving real-life issues. For example, the dynamics of the labor market and the empowerment of women are deeply intertwined with high order beliefs. ...
This study explores the relationship between three high-order self-worth beliefs and working conditions from an economics perspective, as well as the existence of potential mismatch among these beliefs. Conducted in Cartagena, Colombia, 61 domestic workers and 99 employers were surveyed in the field over a two-week span. The primary findings reveal a strong, positive association between domestic worker's sense of security and both first and second order self-worth beliefs. Additionally, more responsibilities and less non-contributory benefits were associated with a higher second-order self-worth. Some potential mechanisms, such as aspirations, sour grapes, and signals, are proposed to shed light on the results. This study offers a novelty data and a groundbreaking perspective in comprehending the dynamics and primary challenges faced by domestic workers in the city.
... According to appraisal theory [28][29][30][31][32][33] , these types of cognitive evaluations can evoke different types of feelings, which will ultimately impact how the beneficiary responds. Psychological Game Theory (PGT) [34][35][36] provides tools for modeling these higher order beliefs about intentions, expectations, and fairness in the context of reciprocity decisions 26,27,37,38 . Actions that are inferred to be motivated by altruistic intentions are more likely to be rewarded, while those thought to be motivated by strategic or self-interested intentions are more likely to be punished 26,27,37,38 . ...
... Building on our conceptual model of indebtedness, we developed two computational models using a Psychological Game Theoretic framework [34][35][36] to predict reciprocity and help-acceptance decisions that maximize the beneficiary's expected utility based on the competing latent motivations of self-interest, communal concern (i.e., guilt and gratitude), and obligation (Eq. 1). ...
Receiving a favor from another person may induce a negative feeling of indebtedness for the beneficiary. In this study, we explore these hidden costs by developing and validating a conceptual model of indebtedness across three studies that combine a large-scale online questionnaire, an interpersonal game, computational modeling, and neuroimaging. Our model captures how individuals perceive the altruistic and strategic intentions of the benefactor. These inferences produce distinct feelings of guilt and obligation that together comprise indebtedness and motivate reciprocity. Perceived altruistic intentions convey care and communal concern and are associated with activity in insula, ventromedial prefrontal cortex and dorsolateral prefrontal cortex, while inferred strategic intentions convey expectations of future reciprocity and are associated with activation in temporal parietal junction and dorsomedial prefrontal cortex. We further develop a neural utility model of indebtedness using multivariate patterns of brain activity that captures the tradeoff between these feelings and reliably predicts reciprocity behavior.
... Payoffs in a strategic game depend on the strategic actions of the players, their belief in other players, what they think others believe about other players, etc. Beliefs are dependent on reality thus, there are always sequential equilibria in sequential games [18]. Rationality in the behaviour of the players entails the iterative elimination of weakly dominated strategy. ...
... In any sequential game such as the game of strokes, there will always be sequential equilibria [18]. ...
Strategic decision-making for sequential move games requires rationality and continuity of rationality to guarantee maximum payoffs at all nodes/stages/levels. Rationality and continuity of rationality in a player's behaviour are not often observed and/or maintained thus, leading to less optimal outcomes. More so, the belief in an opponent's rationality, on the other hand, co-determines the level of effort a player employs while making strategic decisions. Given the irrationality and discontinuity of rationality in a sequential move game with mover advantages, there are strategic steps (algorithms) to convert and/or maintain the mover advantages of an irrational player. In this paper, the conversion strategy algorithms, as well as the optimal strategy algorithms, are developed using the Beta Limit Sum (BLS) model and the game of strokes. The simulation exercises confirm that the BLS strategy model is an optimal solution for the finite sequential game of strokes. One of the key applications of these strategies is that of resource economics like environmental resources (clean water, air & land). These are public goods, as such, the optimal strategy entails that the community cooperates as one entity and takes the same actions or strategy to maintain a healthy and clean state of the communal environmental resources.
... For simple standard forms of games (e.g., the Prisoner's Dilemma) it is reasonable to assume that an agent can infer the game structure and payoffs. However, while various forms of expectation have been modelled using game theory, for example, the Confidence game [10], where payoffs depend on agents' beliefs that represent expectations, the plain-plateau scenario [14], where a credible commitments creates an expectation, and the Bravery game [10], where bold and timid decision-making creates expectations, we think these are less amenable to a utility-based encoding inferred by an agent (rather than a programmer). ...
... For simple standard forms of games (e.g., the Prisoner's Dilemma) it is reasonable to assume that an agent can infer the game structure and payoffs. However, while various forms of expectation have been modelled using game theory, for example, the Confidence game [10], where payoffs depend on agents' beliefs that represent expectations, the plain-plateau scenario [14], where a credible commitments creates an expectation, and the Bravery game [10], where bold and timid decision-making creates expectations, we think these are less amenable to a utility-based encoding inferred by an agent (rather than a programmer). ...
It has been argued that one role of social constructs, such as institutions, trust and norms, is to coordinate the expectations of autonomous entities in order to resolve collective action situations (such as collective risk dilemmas) through the coordination of behaviour. While much work has addressed the formal representation of these social constructs, in this paper we focus specifically on the formal representation of, and associated reasoning with, the expectations themselves. In particular, we investigate how explicit reasoning about expectations can be used to encode both traditional game theory solution concepts and social mechanisms for the social dilemma situation. We use the Collective Action Simulation Platform (CASP) to model a collective risk dilemma based on a flood plain scenario and show how using expectations in the reasoning mechanisms of the agents making decisions supports the choice of cooperative behaviour.
... Psychological game theory integrates beliefs, emotions and cognitive biases, improving our understanding of human behaviour in strategic situations by recognizing imperfect information and deviations from strict rationality [95][96][97][98][99][100][101]. Psychological game theory aims to account for the fact that what you believe others will do or think can actually make you happier or unhappier. ...
We review theoretical approaches for modelling the origin, persistence and change of social norms. The most comprehensive models describe the coevolution of behaviours, personal, descriptive and injunctive norms while considering influences of various authorities and accounting for cognitive processes and between-individual differences. Models show that social norms can improve individual and group well-being. Under some conditions though, deleterious norms can persist in the population through conformity, preference falsification and pluralistic ignorance. Polarization in behaviour and beliefs can be maintained, even when societal advantages of particular behaviours or belief systems over alternatives are clear. Attempts to change social norms can backfire through cognitive processes including cognitive dissonance and psychological reactance. Under some conditions social norms can change rapidly via tipping point dynamics. Norms can be highly susceptible to manipulation, and network structure influences their propagation. Future models should incorporate network structure more thoroughly, explicitly study online norms, consider cultural variations and be applied to real-world processes.
This article is part of the theme issue ‘Social norm change: drivers and consequences’.
... Our simple model allows for all players' strategies to enter individuals' utilities, but not their beliefs as in psychological games introduced byGeanakoplos et al. (1989). However, as shown bySegal and Sobel (2007), making room for strategies as arguments of utility corresponds to a particular class of psychological games. ...
A model that only focuses on economic relations, and in which efficiency and equity are defined in terms of resource allocation may miss an important part of the picture. We propose a canonical extension of the standard general equilibrium model that embeds economic activities in a larger game of social interactions. Such a model combines general equilibrium effects with social multiplier effects and considerably enriches the analysis of efficiency and equity. Efficiency involves coordination between economic and social interactions, may depend on social norms, and may strongly interact with the distribution of resources. Equity can be defined in a comprehensive, socioeconomic way, and a decomposition into an economic and a social component is possible.
... There have been efforts to model psychological processes such as mentalizing using psychological game theory (L. J. Chang & Smith, 2015;Dufwenberg & Kirchsteiger, 2004;Gao et al., 2021;Geanakoplos et al., 1989;González & Chang, 2021). There have also been developments emerging from the field of cognitive science modeling communication (Frank & Goodman, 2012;Hawkins et al., 2023) and inferring representations of others' mental state using inverse-planning frameworks and spatiotemporal reasoning (Baker et al., 2017;Fan et al., 2020;Ho et al., 2022;Jara-Ettinger, 2019;Jern et al., 2017;Malik & Isik, 2022). ...
For over a century, psychology has focused on uncovering mental processes of a single individual. However, humans rarely navigate the world in isolation. The most important determinants of successful development, mental health, and our individual traits and preferences arise from interacting with other individuals. Social interaction underpins who we are, how we think, and how we behave. Here we discuss the key methodological challenges that have limited progress in establishing a robust science of how minds interact and the new tools that are beginning to overcome these challenges. A deep understanding of the human mind requires studying the context within which it originates and exists: social interaction.
... He believed that when people are motivated by reciprocity, intention will play a crucial role, that is, when a person wants to be kind to those who are friendly to him or retaliate against those who are unfriendly to him, he must consider whether his action intention is friendly [44] . To this end, Rabin used the psychological game framework developed by Geanakoplos et al. [45] , to incorporate reciprocity motivation into two-person game and build a two-person complete information static game model. Yin and Zhao built a multi-person complete information dynamic game model aiming at the limitations of the Rabin model, focusing on how strategy choice and reciprocity motivation change in sub-games, and requiring sequential rationality [46] . ...
p class="MDPI17abstract">In the process of collaborative digital green innovation of photovoltaic building materials enterprises, knowledge sharing between photovoltaic building materials enterprises and academic and research institutions is conducive to the achievement of win-win goals of enterprises and academic and research institutions. However, due to the non-contractual relationship between cooperative subjects, it is difficult to observe the efforts of members, which is easy to cause poor information. Therefore, knowledge reciprocity incentive is particularly important. In this paper, the sequential reciprocity model is introduced to analyze the knowledge interaction between photovoltaic building materials enterprises, and academic and research institutions on cooperative green innovation. The results show that: (1) when the reciprocity sensitivity of academic and research institutions is large enough, academic and research institutions can feel the goodwill conveyed by the high effort level of knowledge sharing, and will reciprocate with friendly behavior. (2) When the reciprocity sensitivity of academic and research institutions is small, they will choose to pay a low level of effort in knowledge sharing. (3) When the reciprocity sensitivity of academic and research institutions is in the middle value, the higher effort level of the institutions will increase with the increase of reciprocity sensitivity of the institutions. In this paper, the sequential reciprocity model is introduced to study the reciprocity incentive effect of knowledge sharing in enterprise cooperative digital green innovation from the perspective of dynamic domain, in order to enrich the reciprocity theory and provide reference for the knowledge sharing incentive problem of enterprise cooperative digital green innovation.</p
... Because the agent's payoff depends on the audience's belief, we adopt the notion of sequential equilibria in an induced psychological game in the sense of Dufwenberg and Dufwenberg (2018), Battigalli and Dufwenberg (2009) and Geanakoplos et al. (1989). ...
... We investigate this mechanism of intention-based reciprocity by adopting the belief-dependent utility modeling approach, as proposed by Geanakoplos et al. (1989) and Battigalli and Dufwenberg (2022), in the context of a sequential Prisoner's Dilemma game. We consider two types of trust as beliefs about each other's intentions. ...
Policy decisions about nuclear weapons are frequently driven more by political factors than strategic considerations, a trend that may be attributed to a lack of clear theoretical frameworks. This chapter contributes to the understanding of nuclear stability and the role of nuclear weapons in contexts that previous research has not thoroughly explored. Utilizing a rational choice approach, our new conditional deterrence model examines both structural and motivational factors, revealing that situations where parties are in a balance of terror can provoke conflict rather than peace. Conversely, the notion of conditional anarchy offers a more optimistic view, highlighting that stability in deterrence is influenced by both cooperative and competitive elements, with an emphasis on maintaining the status quo as a key factor in fostering peaceful relations. These findings provide insight into the current international nuclear order, revealing a complex interplay of collaboration and self-interest.
... In view of the potential importance of beliefs, this section discusses prominent classes of belief-dependent theories of social preferences -reciprocity theories, guilt aversion theory, and theories that include emotions in social preference research. Rabin (1993) is the path-breaking paper in economics on intentions-based reciprocity, based on the tools of psychological game theory (Geanakoplos, Pierce and Stachetti 1989). ...
... Even when decisions are not repeated, the incentives to free-ride are reduced because each spouse may be afraid of losing the love of a partner if the latter were to observe their non-co-operative deviation. Similarly, using psychological games, Geanakoplos et al. (1989) assume that spouses' pay-offs depend on the expectation the partner has about their actions. Because of guilt, pay-offs are lower when the actions taken differ from these expectations. ...
As a result of widespread mistreatment and overt discrimination in all dimensions of their lives, women lack significant autonomy. The central preoccupation of this book is to explore key sources of female empowerment and discuss the current challenges and opportunities for the future. Schematically, three main domains are distinguished. The first is marriage and women’s relative bargaining position within the household. Since in developing countries marriage is essentially universal and generally arranged by the parents, women have little say in the choice of their partner and largely depend on their husband for their livelihoods and well-being. How marriage, divorce, and remarriage practices have evolved and with what effects for women, is therefore of crucial concern. The second domain is the set of options available to women outside of marriage and in the context of their community. Given the importance of household dynamics in determining female well-being, a crucial step towards women’s empowerment consists of improving such options, economic and collective action opportunities in particular. The third domain belongs to the realm of over-arching discriminatory laws and cultural norms. Can the government acting as lawmaker contribute to modifying norms and practices that disadvantage women? Or, to be effective, do legal moves need to be complemented by other initiatives such as the expansion of economic opportunities for women? Do discriminatory social norms necessarily dissolve with improved legal status for women? These questions, and other related issues, are tackled from different perspectives, by top scholars with well-established experience in gender-focused economic and social research.
... Совокупность моделей, предусматривающих влияние этого чувства и сопутствующего ему, на поведение в играх получило название психологической теории игр (psychological game theory), это понятие ввели исследователи Дж. Геанакоплос, Д. Пирс и Э. Стаккетти (Geanakoplos, Pearce, Stacchetti, 1989). Простая модель игры с двумя игроками, например, когда водитель такси ожидает чаевые, а пассажир уверен в этом ожидании таксиста, была рассмотрена П. Баттигалли и М. Дюфвенбергом (Battigalli, Dufwenberg, 2007). ...
Despite the fact that the names of a number of Nobel laureates are associated with behavioral economics, researchers regard this branch of science as an unorthodox, avant-garde research program. This article aims to fill this theoretical gap and link behavioral economics to mainstream of economic thought, as well as to divide behavioral economics into several directions — relative to the initial approaches or theories of neoclassics. In the first row of cases, we collected those approaches of neoclassical economics about economic behavior, in relation to which alternative concepts were proposed by behavioral economics. These neoclassical approaches are rationality, awareness, egoism of behavior. Another series is neoclassical theories, in dialogue with which theories of behavioral economics arose. These are theories of expected utility, game theory, exponential discounted utility, revealed preferences, rational expectations, efficient market. The sequence of development of behavioral economics we presented connects it, a once heterodox branch of science with the mainstream economic thought. The article can serve as a guide to the most important areas of research in behavioral economics. This study systematizes scientific knowledge and establishes methodological links within it.
... Guilt results from an appraisal that individuals have done something (or could do something) wrong which could harm others (Lewis, 1971;Zeelenberg & Breugelmans, 2008). According to the guilt aversion model (Geanakoplos et al., 1989), people want to avoid feeling guilty so as to not let others down. Not engaging in the "right" behavior might let others down and could impact their relationship with others. ...
Studies have shown that older adolescents have a low perceived personal risk of COVID-19, and yet their ability and willingness to engage in COVID-19 prevention behaviors is imperative for community health. Thus, health communication scholars need to consider alternative psycho-social predictors of prevention behaviors that will assist in protecting others in a pandemic. Based on Schwartz’s Norms Activation Model (NAM; Schwartz, 1977), we examined the relationship between moral norms and COVID-19 prevention behaviors (mask wearing and physical distancing). We predicted that anticipated guilt would mediate the relationship between moral norms and intention to engage in prevention behaviors, and that collective orientation would strengthen the association between moral norms and anticipated guilt. We tested predictions with data from a cross-sectional survey with a probability-based sample of college students at a large land grant university. These data indicated that moral norms were associated with behavioral intention, and this relationship was mediated by anticipated guilt. Collective orientation was found to moderate the relationship between moral norms and anticipated guilt in the context of physical distancing but not mask wearing. These findings suggest that making moral norms salient when designing an intervention is an effective strategy for older adolescents.
... Prior work by economists on "psychological games" (Battigalli & Dufwenberg, 2009;Battigalli, Corrao, & Dufwenberg, 2019;Geanakoplos, Pearce, & Stacchetti, 1989) shows that people engaged in strategic interactions care about the thoughts and feelings of those they interact with. The current work identifies a specific form that such concern takes: People care about what offenders think about the punishment they receive-that they understand they have been punished, and why, although, according to our studies, not necessarily by whom. ...
While revenge is typically thought to serve utilitarian goals (deter future offenses) or as an end in itself (restore fairness, equate suffering), we test whether “belief-based” motives also shape revenge behavior. Across four studies—one observational, two hypothetical choice, and one real choice—we find evidence that avengers want the offender to understand why (and sometimes by whom) they are being punished, even when doing so cannot change the offender’s future behavior. Avengers prefer punishments that allow them to communicate the reason to offenders, and they are willing to compromise on distributive justice to do so. Furthermore, avengers are less motivated to cause suffering if offenders remain ignorant of the reason. We explore reasons beyond deterrence that explain why avengers may care about what offenders believe, and also discuss the implications of these motives for organizations.
We study, both theoretically and experimentally, a communication game with and without seller competition and embed it in a psychological-game framework where players experience costs for lying, misleading others, and being disappointed. We derive the equilibrium predictions of this model, compare them to the setting without psychological payoffs, and test these predictions in a laboratory experiment, in which we induce both material and psychological payoffs. We find that the setting in which players have both material and psychological payoffs features more trade, trades goods of marginally better quality, and does so without welfare losses to either side of the market relative to the setting with material payoffs only. However, the introduction of competition counteracts this improvement and lowers welfare for both sides of the market. This happens due to a surge in dishonesty by sellers in the competitive setting and the buyers’ inability to detect this deception.
Cet article étudie le comportement des horticulteurs face à l’urgence de coopérer pour mener des actions collectives. Ces dernières existent, mais sont souvent le résultat d’opérations ponctuelles. Lors d’un jeu du bien public, dans une enquête rémunérée en ligne, si les acteurs se révèlent altruistes et coopératifs, un biais apparaît : ils se jugent plus coopératifs que les autres, alors qu’en réalité ils ne le sont pas. Cet effet explique que les actions collectives ne se maintiennent pas, et que la chaîne de la réciprocité se défasse. Notre étude révèle aussi un profil type d’horticulteurs qui s’engageraient dans les organismes professionnels : les mobiliser permettrait ainsi aux actions collectives d’être appliquées et de durer. Classification JEL : C93, D71, Q13.
We introduce a reciprocity protocol , an innovative approach to coordinating and sharing rewards in blockchains. Inherently decentralized and implementable, it puts emphasis on incentives rather than forcing specific sharing rules from the outset. Analyzing the non-cooperative game the protocol induces, we identify a robust, strict, and Pareto-dominant symmetric equilibrium. In it, even self-centered participants show extensive systemic reciprocity. Thus, despite a setting that is generally unfavorable to reciprocal behavior, the protocol enables users to build trust between themselves by taking on a role akin to a social contract.
Social psychologists attempt to explain how we interact by appealing to basic principles of how we think. To make good on this ambition, they are increasingly relying on an interconnected set of formal tools that model inference, attribution, value-guided decision making, and multi-agent interactions. By reviewing progress in each of these areas and highlighting the connections between them, we can better appreciate the structure of social thought and behavior, while also coming to understand when, why, and how formal tools can be useful for social psychologists.
Expected final online publication date for the Annual Review of Psychology, Volume 75 is January 2024. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.
Building on a partner-switching mechanism, we experimentally test two theories that posit different reasons why promises breed trust and cooperation. The expectation-based explanation (EBE) operates via belief-dependent guilt aversion, while the commitment-based explanation (CBE) suggests that promises offer commitment power via a (belief-independent) preference to keep one’s word. Previous research performed a similar test, which we argue should be interpreted as concerning informal agreements rather than (unilateral) promises.
Solving humanity's social-environmental challenges calls for collective action by relevant actors. Hence, involving these actors in the policy process has been deemed both necessary and promising. But how and to what extent can participatory policy interventions (PIs) foster collective action for sustainable environmental and natural resource management? Lab and lab-in-the-field experiments on co-operation in the context of collective action challenges (i.e. social dilemmas) and case study research on participatory processes both offer insights into this question but have hitherto mainly remained unconnected. This article reviews insights from these two streams of literature in tandem, synthesising and analysing them using the institutional analysis and development (IAD) framework in combination with the network of action situations (NAS) framework and the social-ecological systems (SES) framework. We thus perform an integrative and interpretative narrative review to draw a richer and more nuanced picture of PIs: their potential impacts, their (institutional and behavioural) mechanisms and challenges, and caveats and recommendations for their design and implementation. Our review shows that PIs can indeed foster collective action by (a) helping the relevant actors craft suitable and legitimate institutional arrangements and (b) addressing and/or influencing actors' attributes of relevance to collective action, namely their individual and shared understandings, beliefs and preferences. To fulfil this potential, the organisers and sponsors of PIs must address and link to the broader context through soundly designed and implemented processes. Complementary follow-up, enforcement and conflict resolution mechanisms are necessary to nurture, reassure and sustain understandings, beliefs and preferences that undergird trust-building and collective action. The conceptual framework developed for the review can help researchers and practitioners further assess these insights, disentangle PIs' mechanisms and impacts, and integrate the research and practice of participatory governance and collective action.
The frustration-aggression hypothesis posits that anger affects economic behaviour essentially by temporally changing individual social preferences and specifically attitudes towards punishment. Here, we test a different channel in an experiment where we externally induce anger to a subgroup of participants (following a standard procedure that we verify by using a novel method of textual analysis). We show that anger can impair the capacity to think strategically in a beauty-contest game, in a pre-registered experiment. Angry participants choose numbers further away from the best response level and earn significantly lower profits. Using a finite mixture model, we show that anger increases the number of level-zero players by 9 percentage points, a percentage increase of more than 30%. Furthermore, with a second pre-registered experiment, we show that this effect is not common to all negative emotions. Sad participants do not play significantly further away from the best response level than the control group and sadness does not lead to more level-zero play.
We experimentally study information transmission by experts motivated by their reputation for being well-informed. In our game of reputational cheap talk, a reporter privately observes information about a state of the world and sends a message to an evaluator; the evaluator uses the message and the realized state of the world to assess the reporter’s informativeness. We manipulate the key driver of misreporting incentives: the uncertainty about the phenomenon to forecast. We highlight three findings. First, misreporting information is pervasive even when truthful information transmission can be an equilibrium strategy. Second, consistent with the theory, reporters are more likely to transmit information truthfully when there is more uncertainty on the state. Third, evaluators have difficulty learning reporters’ strategies and, contrary to the theory, assessments react more strongly to message accuracy when reporters are more likely to misreport. In a simpler environment with computerized evaluators, reporters learn to best reply to evaluators’ behavior and, when the state is highly uncertain and evaluators are credulous, to transmit information truthfully.
This paper was accepted by Yan Chen, behavioral economics and decision analysis.
Funding: Financial support from the H2020 European Research Council [Grant 295835 (EVALIDEA)] is gratefully acknowledged.
Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4629 .
We study how the suspicion that communicated information might be deceptive affects the nature of what can be communicated in a sender-receiver game. Sender is said to deceive Receiver if she sends a message that induces a belief that is different from the belief that should have been induced in the realized state. Deception is costly to Sender and the cost is endogenous: it is increasing in the distance between the induced belief and the belief that should have been induced. A message function that induces Sender to engage in deception is not credible and cannot be part of an equilibrium. We study credible communication with state-dependent and state-independent Sender's preferences. The cost of deception parametrizes the sender's ability to commit to her strategy. Through varying this cost, our model spans the range from cheap talk, or no commitment (Crawford and Sobel, 1982) to full commitment (Kamenica and Gentzkow, 2011).
Beliefs play a central role in our lives. They lie at the heart of what makes us human, they shape the organization and functioning of our minds, they define the boundaries of our culture, and they guide our motivation and behavior. Given their central importance, researchers across a number of disciplines have studied beliefs, leading to results and literatures that do not always interact. The Cognitive Science of Belief aims to integrate these disconnected lines of research to start a broader dialogue on the nature, role, and consequences of beliefs. It tackles timeless questions, as well as applications of beliefs that speak to current social issues. This multidisciplinary approach to beliefs will benefit graduate students and researchers in cognitive science, psychology, philosophy, political science, economics, and religious studies.
Psychological games aim to represent situations in which players may have belief-dependent motivations. In this setting, utility functions are directly dependent on the entire hierarchy of beliefs of each player. On the other hand, the literature on strategic ambiguity in classical games highlights that players may have ambiguous (or imprecise) beliefs about opponents’ strategy choices. In this paper, we look at the issue of ambiguity in the framework of simultaneous psychological games by taking into account ambiguous hierarchies of beliefs and study a natural generalization of the psychological Nash equilibrium concept to this framework. We give an existence result for this new concept of equilibrium and provide examples that show that even an infinitesimal amount of ambiguity may alter significantly the equilibria of the game or can work as an equilibrium selection device. Finally, we look at the problem of stability of psychological equilibria with respect to ambiguous trembles on the entire hierarchy of correct beliefs and we provide a limit result that gives conditions so that sequences of psychological equilibria under ambiguous perturbation converge to psychological equilibria of the unperturbed game.
A formal model is given of Harsanyi's infinite hierarchies of beliefs. It is shown that the model closes with some Bayesian game with incomplete information, and that any such game can be approximated by one with a finite number of states of world.
We propose a new criterion for equilibria of extensive games, in the spirit of Selten's perfectness criteria. This criterion requires that players' strategies be sequentially rational: Every decision must be part of an optimal strategy for the remainder of the game. This entails specification of players' beliefs concerning how the game has evolved for each information set, including informaiton sets off the equilibrium path. The properties of sequential equilibria are developed; in particular, we study the topological structure of the set of sequential equilibria. The connections with Selten's trembling-hand perfect equilibria are given.
The paper develops a new theory for the analysis of games with incomplete information where the players are uncertain about some important parameters of the game situation, such as the payoff functions, the strategies available to various players, the information other players have about the game, etc. However, each player has a subjective probability distribution over the alternative possibilities.
In most of the paper it is assumed that these probability distributions entertained by the different players are mutually “consistent”, in the sense that they can be regarded as conditional probability distributions derived from a certain “basic probability distribution” over the parameters unknown to the various players. But later the theory is extended also to cases where the different players' subjective probability distributions fail to satisfy this consistency assumption.
In cases where the consistency assumption holds, the original game can be replaced by a game where nature first conducts a lottery in accordance with the basic probability distribution, and the outcome of this lottery will decide which particular subgame will be played, i.e., what the actual values of the relevant parameters will be in the game. Yet, each player will receive only partial information about the outcome of the lottery, and about the values of these parameters. However, every player will know the “basic probability distribution” governing the lottery. Thus, technically, the resulting game will be a game with complete information. It is called the Bayes-equivalent of the original game. Part I of the paper describes the basic model and discusses various intuitive interpretations for the latter. Part II shows that the Nash equilibrium points of the Bayes-equivalent game yield “Bayesian equilibrium points” for the original game. Finally, Part III considers the main properties of the “basic probability distribution”.
Part I of this paper has described a new theory for the analysis of games with incomplete information. It has been shown that, if the various players' subjective probability distributions satisfy a certain mutual-consistency requirement, then any given game with incomplete information will be equivalent to a certain game with complete information, called the “Bayes-equivalent” of the original game, or briefly a “Bayesian game.”
Part II of the paper will now show that any Nash equilibrium point of this Bayesian game yields a “Bayesian equilibrium point” for the original game and conversely. This result will then be illustrated by numerical examples, representing two-person zero-sum games with incomplete information. We shall also show how our theory enables us to analyze the problem of exploiting the opponent's erroneous beliefs.
However, apart from its indubitable usefulness in locating Bayesian equilibrium points, we shall show it on a numerical example (the Bayes-equivalent of a two-person cooperative game) that the normal form of a Bayesian game is in many cases a highly unsatisfactory representation of the game situation and has to be replaced by other representations (e.g., by the semi-normal form). We shall argue that this rather unexpected result is due to the fact that Bayesian games must be interpreted as games with “delayed commitment” whereas the normal-form representation always envisages a game with “immediate commitment.”
The concept of a perfect equilibrium point has been introduced in order to exclude the possibility that disequilibrium behavior is prescribed on unreached subgames [SELTEN 1965 and 1973]. Unfortunately this definition of perfectness does not remove all difficulties which may arise with respect to unreached parts of the game. It is necessary to reexamine the problem of defining a satisfactory non-cooperative equilibrium concept for games in extensive form. Therefore a new concept of a perfect equilibrium point will be introduced in this paper2). In retrospect the earlier use of the word "perfect" was premature. Therefore a perfect equilibrium point in the old sense will be called "subgame perfect". The new definition of perfectness has the property that a perfect equilibrium point is always subgame perfect but a subgame perfect equilibrium point may not be perfect. It will be shown that every finite extensive game with perfect recall has at least one perfect equilibrium point. Since subgame perfectness cannot be detected in the normal form, it is clear that for the purpose of the investigation of the problem of perfectness, the normal form is an inadequate representation of the extensive form. It will be convenient to introduce an "agent normal form" as a more adequate representation of games with perfect recall.
This paper estimates the risk preferences of cotton farmers in Southern Peru, using the results from a multiple-price-list lottery game. Assuming that preferences conform to two of the leading models of decision under risk--Expected Utility Theory (EUT) and Cumulative Prospect Theory (CPT)--we find strong evidence of moderate risk aversion. Once we include individual characteristics in the estimation of risk parameters, we observe that farmers use subjective nonlinear probability weighting, a behavior consistent with CPT. Interestingly, when we allow for preference heterogeneity via the estimation of mixture models--where the proportion of subjects who behave according to EUT or to CPT is endogenously determined--we find that the majority of farmers' choices are best explained by CPT. We further hypothesize that the multiple switching behavior observed in our sample can be explained by nonlinear probability weighting made in a context of large random calculation mistakes; the evidence found on this regard is mixed. Finally, we find that attaining higher education is the single most important individual characteristic correlated with risk preferences, a result that suggests a connection between cognitive abilities and behavior towards risk.
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
Revenge and Rational Play Discussion Paper No. 138Spieltheoretische Behandlung eines Oligopolmodells mit Nachfrage— tragheitReexamination of the Perfectness Concept for Equilibrium Points in Extensive Games
- B Nalebuff
- M Shubik
- Woodrow
- Selten School
- R Staatswiss Selten
NALEBUFF, B., AND SHUBIK, M. (1988). “Revenge and Rational Play,” Discussion Paper No. 138, Woodrow Wilson School SELTEN, R. (1965). “Spieltheoretische Behandlung eines Oligopolmodells mit Nachfrage— tragheit,” Staatswiss. 121, 301-324 SELTEN, R. (1975). “Reexamination of the Perfectness Concept for Equilibrium Points in Extensive Games,” Int J. Game Theory 4, 25-55.
Hierarchies of Beliefs and Common Knowl-edgeInformation Dependent Games: Can Common Sense be Common Knowledge?Games with Incomplete Information Played by Bayesian Play-ers,“ Parts I, II, and III
- A Brandenburger
- E Dekel
- Harvard Mimeo
- I Gilboa University
- D Harsanyi Schmeidler
- J Kreps
BRANDENBURGER, A , AND DEKEL, E. (1985) “Hierarchies of Beliefs and Common Knowl-edge,” mimeo, Harvard University GILBOA, I , AND SCHMEIDLER, D. (1988). “Information Dependent Games: Can Common Sense be Common Knowledge?” Econ. Lett. 27, 215-221 HARSANYI, J. (1967-1968) “Games with Incomplete Information Played by Bayesian Play-ers,“ Parts I, II, and III, Manage Sci. 14, 159-182, 320-334, 486-502 KREPS, D., AND WILSON, R. (1982). “Sequential Equilibria,” Econometrlca 50, 863-894
Extensive Games and the Problem of Information,” in Contributions to the Theory of GamesFormulation of Bayesian Analysis for Games with Incomplete Information
- H H Kuhn
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- J Mertens
- And Zamir
KUHN, H. (1953). “Extensive Games and the Problem of Information,” in Contributions to the Theory of Games (H. Kuhn and A. Tucker, Eds ), Vol. 2. Princeton, NJ. Princeton Univ. Press MERTENS, J .-F , AND ZAMIR, S. (1985). “Formulation of Bayesian Analysis for Games with Incomplete Information,” Int. J. Game Theory 14, 1-29
Topological Spaces Hierarchies of Beliefs and Common Knowl-edge Information Dependent Games: Can Common Sense be Common Knowledge
- References Berg
- C Macmillan
- A Brandenburger
- E And Dekel
REFERENCES BERG, C. (1963). Topological Spaces. New York, NY: Macmillan. BRANDENBURGER, A., AND DEKEL, E. (1985). " Hierarchies of Beliefs and Common Knowl-edge, " mimeo, Harvard University. GILBOA, I., AND SCHMEIDLER, D. (1988). " Information Dependent Games: Can Common Sense be Common Knowledge? " Econ. Left. 27, 215-221.
Extensive Games and the Problem of Information Formulation of Bayesian Analysis for Games with Incomplete Information
- H Kuhn
KUHN, H. (1953). " Extensive Games and the Problem of Information, " in Contrihlrtions to the Theory ofComes (H. Kuhn and A. Tucker, Eds.), Vol. 2. Princeton, NJ: Princeton Univ. Press. MERTENS, J.-F., AND ZAMIR, S. (1985). " Formulation of Bayesian Analysis for Games with Incomplete Information, " Inr. J. Game Theory 14, l-29.