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Strategic reasoning in p-beauty contests

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  • Breitmoser, Yves

Abstract

This paper analyzes strategic choice in p-beauty contests. First, I show that it is not generally a best reply to guess the expected target value, even in games with n>2 players, and that iterated best response strictly applied does not induce a choice sequence approximating pk⋅0.5. Second, I argue that the beliefs and actions of players typically considered to be level 2–4 are intuitively captured also by high-level concepts such as quantal response equilibrium and noisy introspection. Third, I analyze this hypothesis econometrically. The results concur. In six different data sets, the choices are described more adequately as mixtures of quantal response equilibrium and noisy introspection than as level-k mixtures.

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Bibliographic Info

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

Volume (Year): 75 (2012)
Issue (Month): 2 ()
Pages: 555-569

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Handle: RePEc:eee:gamebe:v:75:y:2012:i:2:p:555-569

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

Related research

Keywords: Beauty contest; Logit equilibrium; Noisy introspection; Level-k;

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References

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  1. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457 Elsevier.
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  15. 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.
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Citations

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Cited by:
  1. Burchardi, Konrad B. & Penczynski, Stefan P., 2014. "Out of your mind: Eliciting individual reasoning in one shot games," Games and Economic Behavior, Elsevier, vol. 84(C), pages 39-57.
  2. Breitmoser, Yves, 2012. "Cooperation, but no reciprocity: Individual strategies in the repeated Prisoner's Dilemma," MPRA Paper 41731, University Library of Munich, Germany.
  3. Marcus Dittrich & Kristina Leipold, 2014. "Gender Differences in Strategic Reasoning," CESifo Working Paper Series 4763, CESifo Group Munich.
  4. Mariano Runco, 2013. "Estimating depth of reasoning in a repeated guessing game with no feedback," Experimental Economics, Springer, vol. 16(3), pages 402-413, September.

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