Jensen, Martin Kaae and Kozlovskaya, Maria (2016) A Representation Theorem for Guilt Aversion. Journal of Economic Behavior and Organization, 125. pp. 148-161. ISSN 0167-2681

Guilt aversion has been shown to play an important role in economic decision-making. In this paper, we take an axiomatic approach to guilt by deducing a utility representation from a list of easily interpretable assumptions on an agent's preferences. It turns out that our logarithmic representation can mitigate the problem of multiplicity of equilibria to which psychological games are prone. We apply the model in three well-known games and show that its predictions are consistent with experimental observations.

A Representation Theorem for Guilt Aversion (revised).pdf - Accepted Version

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