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Playing the wrong game: An experimental analysis of relational complexity and strategic misrepresentation

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Author Info
Devetag, Giovanna
Warglien, Massimo

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Abstract

It has been suggested that players often produce simplified and/or misspecified mental models of strategic decisions [Kreps, D., 1990. Game Theory and Economic Modeling. Oxford Univ. Press, Oxford]. We submit that the relational structure of players' preferences in a game is a source of cognitive complexity, and may be an important driver of such simplifications. We provide a classification of order structures in two-person games based on the properties of monotonicity and projectivity, and present experiments in which subjects construct representations of games of different relational complexity and subsequently play the games according to these representations. Experimental results suggest that relational complexity matters. More complex games are harder to represent, and this difficulty seems correlated with short term memory capacity. In addition, most erroneous representations are simpler than the correct ones. Finally, subjects who misrepresent the games behave consistently with such representations, suggesting that in many strategic settings individuals may act optimally on the ground of simplified and mistaken premises.

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Publisher Info
Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 62 (2008)
Issue (Month): 2 (March)
Pages: 364-382
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Handle: RePEc:eee:gamebe:v:62:y:2008:i:2:p:364-382

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Web page: http://www.elsevier.com/locate/inca/622836

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rubinstein, Ariel, 1996. "Why Are Certain Properties of Binary Relations Relatively More Common in Natural Language?," Econometrica, Econometric Society, vol. 64(2), pages 343-55, March. [Downloadable!] (restricted)
  2. Stahl, Dale II & Wilson, Paul W., 1994. "Experimental evidence on players' models of other players," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 309-327, December. [Downloadable!] (restricted)
  3. Bondonio, Daniele, 2002. "Evaluating the Employment Impact of Business Incentive Programs in EU Disadvantaged Areas. A case from Northern Italy," P.O.L.I.S. department's Working Papers 27, Department of Public Policy and Public Choice - POLIS. [Downloadable!]
  4. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December. [Downloadable!] (restricted)
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  5. Costa-Gomes, Miguel & Crawford, Vincent P & Broseta, Bruno, 2001. "Cognition and Behavior in Normal-Form Games: An Experimental Study," Econometrica, Econometric Society, vol. 69(5), pages 1193-1235, September.
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  6. A. Rubinstein, 1999. "Economics and Language," Princeton Economic Theory Papers 00s6, Economics Department, Princeton University.
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  1. Andreas Nicklisch, 2006. "Perceiving strategic environments: An experimental study of learning under minimal information," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_17, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  2. Giovanna Devetag & Andreas Ortmann, 2006. "When and Why? A Critical Survey on Coordination Failure in the Laboratory," CEEL Working Papers 0605, Computable and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia. [Downloadable!]
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