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Beliefs estimated from choices in Proposer-Responder Games

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  • Lejarraga, Tomás
  • Lucena, Abel
  • Rubí-Barceló, Antoni

Abstract

We use a large public dataset of proposer-responder games to examine other-regarding preferences and beliefs. We model preferences and beliefs within a quantal response equilibrium framework using a non-linear mixed logit model that takes individual heterogeneity into account. Several measures indicate that parameters are reliably identified. Our participants are heterogeneous with respect to preferences and more so with regard to beliefs about others’ preferences. On average, proposers overestimate responders’ aversion to advantageous inequality, and think of responders as more averse to advantageous inequality and less averse to disadvantageous inequality than themselves. These findings are consistent with an optimism bias.

Suggested Citation

  • Lejarraga, Tomás & Lucena, Abel & Rubí-Barceló, Antoni, 2020. "Beliefs estimated from choices in Proposer-Responder Games," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 442-459.
    • Handle: RePEc:eee:jeborg:v:179:y:2020:i:c:p:442-459
    DOI: 10.1016/j.jebo.2020.09.017
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    More about this item

    Keywords

    Beliefs; Experiments; Quantal Response Equilibrium; Random-parameter estimation;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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