Actions, Beliefs and Feelings: an experimental study on Dynamic Psychological Games

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). Our experimental study goes three steps beyond the existing experimental literature: (a) we test players’ behavior in a …nitely repeated game, in which we elicit beliefs at the beginning of each period; (b) we elicit players’sensitivity to feelings (as guilt aversion or reciprocity), in order to analyze the relationships between actions and feelings in a repeated setting; (c) because of the sensitivity elicitation method, we can study directly games with beliefs-dependent payo¤s as modeled in Battigalli and Dufwenberg (2005). Our experimental results show that eliciting and transmitting the psychological payo¤s and thus letting players play the complete information (repeated) game of trust leads to higher trust and cooperation over time until even the last period as in the corresponding incomplete information game setting without transmission of those