Piercing the “Payoff Function” Veil: Tracing Beliefs and Motives

We develop a non-intrusive approach to experimentally gauge the way agents make their choices. We document the presence of significant heterogeneity in the decision-making process of agents within an interactive setting. The setting is designed to elicit beliefs and motives of agents.


Abstract. This paper develops an experimental methodology that allows the identification of decision-making processes in interactive settings using tracking of non-choice data. This non-intrusive and indirect approach provides essential information for the characterization of beliefs. The analysis reveals significant heterogeneity, which is reduced to two broad types, differentiated by the importance of pecuniary rewards in agents’ payoff function. Most subjects maximize monetary rewards by best responding to beliefs shaped by recent history. Others are able to identify profit-maximizing actions but choose to systematically deviate from them. The interaction among different types is key to understanding aggregate outcomes.


  title={Piercing the ``Payoff Function'' Veil: Tracing Beliefs and Motives},
  author={Fenig, Guidon and Gallipoli, Giovanni and Halevy, Yoram},
  note={Working Paper},
  institution={University of Toronto}