This award funds research that develops new methods in game theory for modeling and predicting human behavior in strategic situations where individual beliefs affect motivation. The goal is to incorporate factors such as emotions, reciprocity, and social norms into a formal mathematical model of strategic behavior.
The PI and his collaborator establish new methods and new solution concepts for these 'psychological games'. They also develop a way to model communication between strategic players. They use the new methods to analyze a number of specific applied problems, including the effect of guilt aversion on behavior, the role of informal agreements in shaping economic outcomes, incomplete contracts, and the effect of a desire for revenge on behavior after an agreement is reached.
