Public Goods Games and Psychological Utility: Theory and Evidence

Abstract

We consider a public goods game which incorporates guilt-aversion/surprise-seeking and the attribution of intentions behind these emotions (Battigalli and Dufwenberg, 2007; Khalmetski et al., 2015). We implement the induced beliefs method (Ellingsen et al., 2010) and a within-subjects design using the strategy method. Previous studies mainly use dictator games - whose results may not be robust to adding strategic components. We find that guilt-aversion is far more important than surprise-seeking; and that the attribution of intentions behind guilt-aversion/surprise-seeking is important. Our between-subjects analysis confirms the results of the within-subjects design.

Keywords: Public goods games, psychological game theory, surprise-seeking/guilt-aversion, attribution of intentions, induced beliefs method, within and between subjects designs.

JEL Classification: D01 (Microeconomic Behavior), D03 (Behavioral Microeconomics), H41 (Public Goods).