These slides are based on Kosfeld, Okada, and Riedl (2009). I presented this paper in the class of Social Preferences: Theories and Evidence on Nov. 12, 2024. Although it is a paper mainly about behavioral and experimental economics, it is structured by both theory and experiment parts. In the theory part, it provided a nice framework for the analysis of endogeneous institution formation in the public goods game, combined this framework with social preferences such as inequity aversion (Fehr and Schmidt, 1999) and got some interesting results which is significantly different from what we can get from a model without social preferences. Technically, the introduction of strict SPNE also allows the model to have a nice refinement of equilibria, in order to reach the more intuitive side of this model. This is very interesting, since it provides a good example of building the bridge between the seemingly complicated theoretical equilibria and the corresponding more-plausibly-realized results in experiments.
However, there is still a lot of stuff to further discuss about this model, one of which suggests a potential absence of belief system in the model structure. This would be even more important when we have heterogeneous agents and want to understand the incentives of them participating in the institution formation. Therefore, I would like to upload this presentation slides as an inspiration, or basis of future studies.
You can also find the slides in pdf version here.
