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Does context promote higher-level thinking in the beauty contest?

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  • Luccasen, R. Andrew

Abstract

Some problems are more easily solved if context is provided. A stylized result from beauty contest experiments is that most choices are consistent with level-1 or level-2 thinking rather than the Nash equilibrium. The beauty contest experiment reported in this paper includes treatments in which context is added. In these treatments, participants are told choices represent the high temperature on a future date, and the winner is the participant whose choice is closest to 2/3 of the average of all choices. The context provided in this experiment hinders, rather than enhances, higher-level thinking.

Suggested Citation

  • Luccasen, R. Andrew, 2013. "Does context promote higher-level thinking in the beauty contest?," Economics Letters, Elsevier, vol. 121(3), pages 421-424.
    • Handle: RePEc:eee:ecolet:v:121:y:2013:i:3:p:421-424
    DOI: 10.1016/j.econlet.2013.09.024
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    References listed on IDEAS

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    1. Antoni Bosch-Domènech & José G. Montalvo & Rosemarie Nagel & Albert Satorra, 2002. "One, Two, (Three), Infinity, ...: Newspaper and Lab Beauty-Contest Experiments," American Economic Review, American Economic Association, vol. 92(5), pages 1687-1701, December.
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    5. Nagel, Rosemarie, 2008. "Experimental Beauty Contest Games: Levels of Reasoning and Convergence to Equilibrium," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 45, pages 391-410, Elsevier.
    6. Nagel, Rosemarie, 1995. "Unraveling in Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 85(5), pages 1313-1326, December.
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    Cited by:

    1. Oren Bar-Gill & Christoph Engel, 2020. "Property is Dummy Proof: An Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2020_02, Max Planck Institute for Research on Collective Goods.

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    More about this item

    Keywords

    Beauty contest; Experiment; Context; Level-k;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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