Author(s): Pierpaolo Battigalli & Martin Dufwenberg
The mathematical framework of psychological game theory is useful for describing many forms of motivation where preferences depend directly on own or others beliefs. It allows for incorporating, e.g., emotions, reciprocity, image concerns, and self-esteem in economic analysis. We explain how and why, discussing basic theory, experiments, applied work, and methodology.
Keywords: psychological game theory; belief-dependent motivation; reciprocity; emotions; image concerns; self-esteem
JEL codes: C72; D91