A representation theorem for guilt aversion

Martin Jensen and Maria Kozlovskaya

Journal of Economic Behavior & Organization, 2016, vol. 125, issue C, 148-161

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.

Keywords: Guilt aversion; Utility representation; Psychological games (search for similar items in EconPapers)
JEL-codes: C72 C91 D03 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:125:y:2016:i:c:p:148-161

DOI: 10.1016/j.jebo.2016.02.001

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