Modeling Sacrifice

Dooseok Jang, Jin-yeong Sohn   Published : August 2024   JEL Code: C70, D91, H40   URL to this Article: https://doi.org/10.1016/j.jebo.2024.06.006

Abstract

Recent evidence suggests that a person's reciprocity toward others depends on the amount of sacrifice made by others. We develop a reciprocity model that incorporates the concept of sacrifice, defined as the payoff forgone when choosing an action. Our model retains many desirable properties of the existing reciprocity models, while capturing the nuanced psychology of reciprocity. In our model, one's motivation to reciprocate increases in the size of others' sacrifice. In two-person games, it can be shown that our model strengthens reciprocity motivation in reciprocity equilibria that are not Nash equilibria under selfish preferences.

Keywords

Sacrifice Reciprocity; Psychological games; Social preferences