Actions, Beliefs and Feelings: An Experimental Study on Dynamic

The main goal of the paper is to study in an experimental setting the relations between actions and beliefs and those between actions and feelings (expressed in terms of belief-dependent motivations), through the application of psychological game theory. Our experimental study goes three steps beyond the existing experi-mental literature: (a) we test playersbehavior in a \u85nitely repeated game, in which we elicit beliefs at the beginning of each period; (b) we elicit playerssensitivity to feelings (as guilt aversion or reciprocity), in order to analyze the relationships between actions, beliefs and feelings in a dynamic setting: the evolution of be-liefs, their correlation with the played action pro\u85le and the way through which they incorporate playersfeelings; (c) we test directly games with beliefs-dependent payo¤s, i.e. psychological games: we study whether psychological payo¤s depend (only) on the beliefs of others, as Battigalli and Dufwenberg (2005) suggest. Our experimental results show that eliciting and transmitting the psychological payo¤s and letting the two players play the complete information (repeated) game of trust leads them to behave in a visibly di¤erent manner (with respect to their behavior in the corresponding incomplete information game setting). More precisely, the public information of speci\u85c belief-dependent motivations (e.g. guilt aversion) incorporated in the psychological payo¤s frequently lead to trust and cooperation until the last stage of the repeated game