Team Production and Esteem: A Dual Selves Model with Belief-Dependent Preferences

Abstract

We propose a dual selves model to integrate affective responses and belief-dependent emotions into game theory. We apply our model to team production and model a worker as being composed of a rational self, who chooses effort, and an emotional self, who expresses esteem. Similar to psychological game theory, utilities depend on beliefs, but only indirectly. More concretely, emotions affect utilities, and the expression of emotions depends on updated beliefs. Modeling affective responses as actions chosen by the emotional self allows us to apply standard game-theoretic solution concepts. The model reveals that with incomplete information about abilities, workers only choose high effort if esteem is expressed based on interpersonal comparisons and if the preference for esteem is a status preference.

Willful Ignorance and Reference-Dependence of Self-Image Concerns

“…To capture the endogenous choice of beliefs, I consider a dual-self model following the setups of, e.g., Bénabou and Tirole (2002), Eil and Rao (2011), Fudenberg andLevine (2006), andGreiff (2019). In the context of my experiment, subjects may decide to be optimistic about their performance and derive utility ex-ante at the cost of a possible disappointment at the end of the experiment.…”

“…I consider dual-self agents who derive reference-dependent utility from self-image. The concept of dual selves distinguishes the "rule chooser" and the "rule user", or a rational and an emotional self, for each agent (Bénabou and Tirole, 2002;Eil and Rao, 2011;Fudenberg and Levine, 2006;Greiff, 2019). The dual-self agent consists of two decision-makers: the rational self (R) and the emotional self (E).…”

Willful Ignorance and Reference-Dependence of Self-Image Concerns

“…To capture the endogenous choice of beliefs, I consider a dual-self model following the setups of, e.g., Bénabou and Tirole (2002), Eil and Rao (2011), Fudenberg andLevine (2006), andGreiff (2019). In the context of my experiment, subjects may decide to be optimistic about their performance and derive utility ex-ante at the cost of a possible disappointment at the end of the experiment.…”

“…I consider dual-self agents who derive reference-dependent utility from self-image. The concept of dual selves distinguishes the "rule chooser" and the "rule user", or a rational and an emotional self, for each agent (Bénabou and Tirole, 2002;Eil and Rao, 2011;Fudenberg and Levine, 2006;Greiff, 2019). The dual-self agent consists of two decision-makers: the rational self (R) and the emotional self (E).…”