Public Goods Games and Psychological Utility: Theory and Evidence

Abstract

We consider a theoretical model of a public goods game that incorporates reciprocity, guilt-aversion/surprise-seeking, and the attribution of intentions behind these emotions. In order to test our predictions, we implement the ‘induced beliefs method’ and a within-subjects design, using the strategy method. We find that all our psychological variables contribute towards the explanation of contributions. Guilt-aversion is pervasive at the individual-level and the aggregate-level and it is relatively more important than surprise-seeking. Our between-subjects analysis confirms the results of the within-subjects design.

Keywords: public goods games, psychological game theory, reciprocity, surprise-seeking/guilt-aversion, attribution of intentions, induced beliefs method, within and between subjects designs

JEL Classification: D010, D030, H410