Disclosure of Belief-Dependent Preferences in a Trust Game

Experimental evidence suggests that agents in social dilemmas have belief-dependent, other-regarding preferences. But in experimental games such preferences cannot be common knowledge, because subjects play with anonymous co-players. We address this issue theoretically and experimentally in the context of a trust game, assuming that the trustee’s choice may be affected by a combination of guilt aversion and intention-based reciprocity. We recover trustees’ belief-dependent preferences from their answers to a structured questionnaire. In the main treatment, the answers are disclosed and made common knowledge within each matched pair. Our main auxiliary assumption is that such disclosure approximately implements a psychological game with complete information. To organize the data, we classify subjects according to their elicited preferences, and compare predictions for the complete-information model (main treatment) with robust qualitative predictions for the incomplete-information model (control).JEL classification: C72, C91, D03. Keywords: Experiments, psychological games, trust game, guilt, reciprocity, incomplete and complete information.