2381/37750
Martin Kaae Jensen
Martin Kaae
Jensen
Maria Kozlovskaya
Maria
Kozlovskaya
A Representation Theorem for Guilt Aversion
University of Leicester
2016
Guilt aversion
Utility representation
Psychological games
2016-06-14 12:11:08
Journal contribution
https://figshare.le.ac.uk/articles/journal_contribution/A_Representation_Theorem_for_Guilt_Aversion/10130960
Guilt aversion has been shown to play an important role in economic decision-making. In this paper, we take an axiomatic approach to guilt by deducing a utility representation from a list of easily interpretable assumptions on an agent's preferences. It turns out that our logarithmic representation can mitigate the problem of multiplicity of equilibria to which psychological games are prone. We apply the model in three well-known games and show that its predictions are consistent with experimental observations.