A representation theorem for guilt aversion

Martin Kaae Jensen, Maria Kozlovskaya

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1 Citation (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)148-161
Number of pages14
JournalJournal of Economic Behavior and Organization
Volume125
DOIs
Publication statusPublished - 1 May 2016

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