In psychological games, higher-order beliefs, emotions, and motives - in addition to actions - affect players’ payoffs. Suppose you are tolerated as opposed to being genuinely accepted by your peers and “friends”. In particular, suppose you are invited to a party, movie, dinner, etc not because your company is desired but because the inviter would feel guilty if she did not invite you. In all of these cases, it is conceivable that the intention behind the action will matter and hence will affect your payoffs. I model intentions in a dynamic non-psychological game under incomplete information. I then modify the game as a standard psychological game in the sense of Geanakoplos, Pearce and Stacchetti (Games and Economic Behavior, 1989) and Rabin (American Economic Review, 1993). I find a complex social interaction in the dynamic psychological equilibrium under incomplete information. In particular, a player may stick to a strategy of accepting every invitation with the goal of discouraging insincere invitations, while in the nonpsychological game this strategy is employed because all invitations are sincere. I discuss how being tolerated but not being truly accepted can explain the rejection of mutually beneficial trades, the choice of identity, social exclusion, marital divorce, and its implication for political correctness and affirmative action.
