Piercing the 'Payoff Function' Veil : Tracing Beliefs and Motives

This paper develops an experimental methodology that allows the identification of decision-making processes in interactive settings using tracking of choice-process 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 choose actions close to maximizing monetary rewards, by best responding to beliefs. Others are able to identify these actions, but choose to systematically deviate from them – exhibiting either altruistic or competitive motives