Research

Published Papers:

Religious identity, trust, reciprocity, and prosociality: Theory and evidence.

Journal of Development Economics, 2024, 166.

Sanjit Dhami, Mengxing Wei, Pavan Mamidi

We use the trust and the dictator games to explore the effects of religious identity on trust, trustworthiness, prosociality, and conditional reciprocity within a beliefs-based model. We provide a novel, rigorous, theoretical model to derive the relevant predictions, which are then tested in lab-in-the-field experiments in the Indian states of Bihar and Uttar Pradesh. We find strong evidence of the effects of religious identity on the belief hierarchies, and the chosen actions, of Hindu and Muslim subjects. Priming for a religious identity has little effect on Hindu subjects but it enhances religious polarization in beliefs and actions among Muslim subjects. There is taste-based discrimination but no statistical discrimination. All our underlying assumptions on beliefs, and their dependence on priming and identity are confirmed by the data, identifying a precise beliefs-based mechanism for the effects of religious identity. More religious subjects expect greater prosociality/reciprocity and often are more prosocial/reciprocal. 


Classical and Belief-Based Gift Exchange Models: Theory and Evidence.

Games and Economic Behavior, 2023, 138: 171-196.

Sanjit Dhami, Mengxing Wei, Ali al-Nowaihi

We derive and test the predictions of three competing models of gift exchange: Classical (CGE); Augmented (AGE) based on unexpected wage surprises; and Belief-based (BGE) that uses belief hierarchies to formally model reciprocity and guilt-aversion. Following Akerlof (1982), we also introduce signals of the typical wage, θw, and effort level, θe, in similar firms. We examine the worker's optimal effort in response to exogenous variation in the wage, w, the signals θw, θe, and a signal of the firm's expectations of effort from the worker, s. All three models predict gift exchange, however, the predictions of the AGE and the CGE models with respect to θw, θe, and s, are rejected. The BGE model successfully explains the data in all these respects. Gift exchange is underpinned by guilt-aversion. We also provide novel empirical evidence of first order stochastic dominance of first and second order beliefs.

JEL Classification: D01; D91.

Keywords: Gift exchange; reciprocity; guilt-aversion; psychological game theory; belief-based models; industry wage and effort norms.

Public Goods Games and Psychological Utility: Theory and Evidence. 

Journal of Economic Behavior & Organization, 2019, 167: 361-390.

Sanjit Dhami, Mengxing Wei, Ali al-Nowaihi

We consider a theoretical model of a public goods game that incorporates reciprocity, guilt-aversion/surprise-seeking, and the attribution of intentions behind these emotions. In order to test our predictions, we implement the ‘induced beliefs method’ and a within-subjects design, using the strategy method. We find that all our psychological variables contribute towards the explanation of contributions. Guilt-aversion is pervasive at the individual-level and the aggregate-level and it is relatively more important than surprise-seeking. Our between-subjects analysis confirms the results of the within-subjects design.

JEL Classification: D01; D03; H41.

Keywords: Public goods games; psychological game theory; reciprocity; surprise-seeking/guilt-aversion; attribution of intentions; induced beliefs method; strategy method; within and between subjects designs.

Quantum Decision Theory, Bounded Rationality and the Ellsberg Paradox. 

Studies in Microeconomics, 2019, 7(1) 110–139. 

Mengxing Wei, Ali al-Nowaihi, Sanjit Dhami 

We test a simple quantum decision model of the Ellsberg paradox. We find that the theoretical predictions of the model are in conformity with our experimental results. The predictions of our quantum model are not statistically significantly different from those of the source dependent model. The source dependent model requires the specification of probability weighting functions in order to fit the evidence. On the other hand, our quantum model makes no recourse to probability weighting functions. This suggests that much of what is normally attributed to probability weighting may actually be due to quantum probability. When we replace quantum probability by Kolmogorov probability in our model, then the Ellsberg paradox reemerges. Hence, we make essential use of quantum probability theory. All our development uses no more than standard linear algebra and real numbers, which are very familiar to economists. This makes our paper accessible to a wider audience than the quantum community.

JEL Classification: D01, D81, D91.

Keywords: Quantum probability, Ellsberg paradox, source dependent model, projective expected utility, bounded rationality.

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