Working Papers

From IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University
via Rontgen, 1 - 20136 Milano (Italy).
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655: Bureaucrat Allocation in the Public Sector: Evidence from the World Bank

Nicola Limodio

654: Tying in evolving industries, when future entry cannot be deterred

Chiara Fumagalli and Massimo Motta

653: Economic Rationality: Investigating the Links between Uncertainty, Complexity, and Sophistication

Ilke Aydogan, Loïc Berger and Valentina Bosetti

652: Behavioral Equivalence of Extensive Game Structures

Pierpaolo Battigalli, Paolo Leonetti and Fabio Maccheroni

651: Asset Pricing vs Asset Expected Returning in Factor Models

Carlo Favero and Alessandro Melone

650: Audi Alteram Partem: An Experiment on Selective Exposure to Information

Salvatore Nunnari and Giovanni Montari

649: Dynamic Legislative Bargaining with Veto Power: Theory and Experiments

Salvatore Nunnari

648: Peer Networks and Entrepreneurship: a Pan-African RCT

Fernando Vega-Redondo, Paolo Pin, Diego Ubfal, Cristiana Benedetti-Fasil, Charles Brummitt, Gaia Rubera, Dirk Hovy and Tommaso Fornaciari

647: Intertemporal Evidence on the Strategy of Populism

Gloria Gennaro, Giampaolo Lecce and Massimo Morelli

646: Psychological Game Theory

Pierpaolo Battigalli and Martin Dufwenberg

645: The Impact of Soft-Skills Training for Entrepreneurs in Jamaica

Diego Ubfal, Irani Arraiz, Diether Beuermann, Michael Frese, Alessandro Maffioli and Daniel Verch

644: Revenue vs Expenditure Based Fiscal Consolidation: The Pass-Trough from Federal Cuts to Local Taxes

Luigi Marattin, Tommaso Nannicini and Francesco Porcelli

643: Partial Norms

Giovanna d’Adda, Martin Dufwenberg, Francesco Passarelli and Guido Tabellini

642: Incorporating Belief-Dependent Motivation in Games Abstract:Psychological game theory (PGT), introduced by Geanakoplos, Pearce & Stacchetti (1989) and significantly generalized by Battigalli & Dufwenberg (2009), extends the standard gametheoretic framework by letting players' utility at endnodes depend on their interactive beliefs. While it is understood that a host of applications that model and/or test the role of emotional and other psychological forces find their home in PGT, the framework is abstract andcomprises complex mathematical objects, such as players' infinite hierarchies of beliefs. Thus,PGT provides little guidance on how to model specific belief-dependent motivations and usethem in game theoretic analysis. This paper takes steps to fill this gap. Some aspects are simplified - e.g., which beliefs matter - but others are refined and brought closer to applications by providing more structure. We start with belief-dependent motivations and showhow to embed them in game forms to obtain psychological games. We emphasize the role oftime and of the perception of players' intentions. We take advantage of progress made on the foundations of game theory to expand and improve on PGT solution concepts.JEL classification:C72; C73; D81; D82; D92. Keywords:Psychological game theory; Belief-dependent motivation; Intentions; Time;Rationalizability; Self-confirming equilibrium; Bayesian sequential equilibrium

Pierpaolo Battigalli, Roberto Corrao and Martin Dufwenberg

641: Epistemic Game Theory without Types Structures: An Application to Psychological Games

Pierpaolo Battigalli, Roberto Corrao and Federico Sanna

640: Dynamic Vertical Foreclosure

Chiara Fumagalli and Massimo Motta

639: Forecasting and Trading Monetary Policy Effects on the Riskless Yield Curve with Regime Switching Nelson†Siegel Models

Massimo Guidolin and Manuela Pedio

637: Learning and Selfconfirming Equilibria in Network Games

Pierpaolo Battigalli, Fabrizio Panebianco and Paolo Pin

636: Identity, Beliefs, and Political Conflict

Nicola Gennaioli and Guido Tabellini

635: Representing Unawareness on State Spaces

Satoshi Fukuda

634: The Value of Offshore Secrets: Evidence from the Panama Papers

James O’Donovan, Hannes Wagner and Stefan Zeume

633: Epistemic Foundations for Set-algebraic Representations of Knowledge

Satoshi Fukuda

632: The Rational Core of Preference Relations

Simone Cerreia-Vioglio and Efe A. Ok

631: An Explicit Representation for Disappointment Aversion and Other Betweenness Preferences

Simone Cerreia-Vioglio, David Dillenberger and Pietro Ortoleva

630: Rational Inattention and Rate Distortion Theory: A Teaching Note

Tommaso Denti, Massimo Marinacci and Luigi Montrucchio

629: Beliefs, Plans, and Perceived Intentions in Dynamic Games

Pierpaolo Battigalli and Nicodemo De Vito

628: Sources of Uncertainty and Subjective Prices

V. Cappelli, Simone Cerreia-Vioglio, F. Maccheroni, Massimo Marinacci and Stefania Minardi

627: Portfolio Performance of Linear SDF Models: An Out-of-Sample Assessment

Massimo Guidolin, Erwin Hansen and Martín Lozano-Banda

626: Modeling Systemic Risk with Markov Switching Graphical SUR Models

Daniele Bianchi, Monica Billio, Roberto Casarin and Massimo Guidolin

625: The Financial Transmission of Housing Bubbles: Evidence from Spain

Alberto Martin, Enrique Moral-Benito and Tom Schmitz

624: The IT Revolution and Southern Europe's Two Lost Decades

Fabiano Schivardi and Tom Schmitz

623: Three layers of uncertainty: an experiment

Ilke Aydogan, Loïc Berger, Valentina Bosetti and Ning Liu

622: Belief-dependent Preferences and Reputation: Experimental Analysis of a Repeated Trust Game

Giuseppe Attanasi, Pierpaolo Battigalli, Elena Manzoni and Rosemarie Nagel

621: Frustration and Anger in the Ultimatum Game: An Experiment

Chiara Aina, Pierpaolo Battigalli and Astrid Gamba

620: A characterization of probabilities with full support in metric spaces, and Laplaces method

Simone Cerreia-Vioglio, Fabio Maccheroni and Massimo Marinacci

619: IO in I-O: Size, Industrial Organization, and the Input-Output NetworkMake a Firm Structurally Important

Basile Grassi

618: Historical Roots of Political Extremism: The Effects of Nazi Occupation of Italy

Nicola Fontana, Tommaso Nannicini and Guido Tabellini

616: Model Uncertainty in Climate Change Economics

Loïc Berger and Massimo Marinacci

615: Multinomial logit processes and preference discovery: inside and outside the black box

Simone Cerreia-Vioglio, F. Maccheroni, Massimo Marinacci and A. Rustichini

614: Estimating Stochastic Discount Factor Models with Hidden Regimes: Applications to Commodity Pricing

Marta Giampietro, Massimo Guidolin and Manuela Pedio

613: Deposit Volatility, Liquidity and Long-Term Investment: Evidence from a Natural Experiment in Pakistan

Ali Choudhary and Nicola Limodio

612: Bank Deposits and Liquidity Regulation: Evidence from Ethiopia

Nicola Limodio and Francesco Strobbe

611: From Weber to Kafka: Political Instability and the Rise of an Inefficient Bureaucracy

Gabriele Gratton, Luigi Guiso, Claudio Michelacci and Massimo Morelli

610: Demand and Supply of Populism

Luigi Guiso, H. Herrera, Massimo Morelli and Tommaso Sonno

609: Stay, Split or Strike: Theory and Evidence on Secessionist vs Centrist Conflict

Joan Esteban, Sabine Flamand, Massimo Morelli and Dominic Rohner

608: Creativity over Time and Space

Michel Serafinelli and Guido Tabellini

607: Ambiguity Attitudes and Self-Confirming Equilibrium in Sequential Games

Pierpaolo Battigalli, Emiliano Catonini, Giacomo Lanzani and Massimo Marinacci

606: Multivariate Wold Decompositions

Simone Cerreia-Vioglio, Fulvio Ortu, Federico Severino and Claudio Tebaldi

605: Policies in Hard Times: Assessing the Impact of Financial Crises on Structural Reforms

Gunes Gokmen, Massimiliano Onorato, Tommaso Nannicini and Chris Papageorgiou

604: Unique Tarski Fixed Points

Massimo Marinacci and Luigi Montrucchio