Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences

Ozan Aksoy and Jeroen Weesie
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Ozan Aksoy: ICS/Department of Sociology, Faculty of Social Sciences, Utrecht University, Padualaan 14, 3584 CH, The Netherlands
Jeroen Weesie: ICS/Department of Sociology, Faculty of Social Sciences, Utrecht University, Padualaan 14, 3584 CH, The Netherlands

Games, 2013, vol. 4, issue 1, 1-23

Abstract: This study investigates the relationship between an actor’s beliefs about others’ other-regarding (social) preferences and her own other-regarding preferences, using an “avant-garde” hierarchical Bayesian method. We estimate two distributional other-regarding preference parameters, ? and ?, of actors using incentivized choice data in binary Dictator Games. Simultaneously, we estimate the distribution of actors’ beliefs about others ? and ?, conditional on actors’ own ? and ?, with incentivized belief elicitation. We demonstrate the benefits of the Bayesian method compared to it’s hierarchical frequentist counterparts. Results show a positive association between an actor’s own (?; ? ) and her beliefs about average (?; ?) in the population. The association between own preferences and the varianc e in beliefs about others’ preferences in the population, however, is curvilinear for ? and insignificant for ?. These results are partially consistent with the cone effect [1,2] which is described in detail below. Because in the Bayesian-Nash equilibrium concept, beliefs and own preferences are assumed to be independent, these results cast doubt on the application of the Bayesian-Nash equilibrium concept to experimental data.

Keywords: Bayesian statistics; Dictator Game; other-regarding preferences; beliefs (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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