Games 2013, 4(1), 66-88; doi:10.3390/g4010066
Article

Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences

ICS/Department of Sociology, Faculty of Social Sciences, Utrecht University, Padualaan 14, 3584 CH, The Netherlands
* Author to whom correspondence should be addressed.
Received: 22 November 2012; in revised form: 28 January 2013 / Accepted: 29 January 2013 / Published: 19 February 2013
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Abstract: This study investigates the relationship between an actor’s beliefs about others’ other-regarding (social) preferences and her own other-regarding preferences, using an “avant-garde” hierarchical Bayesian method. We estimate two distributional other-regarding preference parameters, α and β, of actors using incentivized choice data in binary Dictator Games. Simultaneously, we estimate the distribution of actors’ beliefs about others α and β, conditional on actors’ own α and β, with incentivized belief elicitation. We demonstrate the benefits of the Bayesian method compared to it’s hierarchical frequentist counterparts. Results show a positive association between an actor’s own (α; β ) and her beliefs about average(α; β) in the population. The association between own preferences and the variance in beliefs about others’ preferences in the population, however, is curvilinear for α and insignificant for β. These results are partially consistent with the cone effect [1,2] which is described in detail below. Because in the Bayesian-Nash equilibrium concept, beliefs and own preferences are assumed to be independent, these results cast doubt on the application of the Bayesian-Nash equilibrium concept to experimental data.
Keywords: Bayesian statistics; Dictator Game; other-regarding preferences; beliefs

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MDPI and ACS Style

Aksoy, O.; Weesie, J. Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences. Games 2013, 4, 66-88.

AMA Style

Aksoy O, Weesie J. Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences. Games. 2013; 4(1):66-88.

Chicago/Turabian Style

Aksoy, Ozan; Weesie, Jeroen. 2013. "Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences." Games 4, no. 1: 66-88.

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