Disclosure of belief–dependent preferences in a trust game

Abstract 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, while in the control treatment there is no disclosure. 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 test predictions for the two treatments using both rationalizability and equilibrium. We find that, while preferences are heterogeneous, guilt aversion is the prevalent psychological motivation, and that behavior and elicited beliefs move in the direction predicted by the theory.