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Anchors of strategic reasoning in the traveler’s dilemma

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  • Tong, Hanh T.
  • Freeman, David J.

Abstract

We experimentally study players’ initial beliefs about non-strategic play that anchors their strategic reasoning in the traveler’ s dilemma, a game in which each player chooses a number and has the incentive to undercut their opponent by the minimal amount possible. In a within-subject design, each subject repeatedly plays variations of the traveler’ s dilemma game without feedback. To identify their strategic reasoning, we vary the upper and lower bounds of the strategy space in each round, and also vary the reward/penalty for undercutting. We find that players are both heterogeneous in the amount that they reason, and in their beliefs about non-strategic play. Notably, few players anchor their strategic reasoning on non-strategic uniform random play. We also find ample evidence of non-strategic play. Our results caution against the common practice of assuming the same anchor of initial reasoning for all players when estimating players’ depths of strategic reasoning.

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  • Tong, Hanh T. & Freeman, David J., 2021. "Anchors of strategic reasoning in the traveler’s dilemma," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 28-38.
    • Handle: RePEc:eee:jeborg:v:191:y:2021:i:c:p:28-38
    DOI: 10.1016/j.jebo.2021.08.026
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    1. Bernabe, Angelique & Hossain, Tanjim & Yu, Haomiao, 2021. "Truth, Honesty, and Strategic Interactions," MPRA Paper 109968, University Library of Munich, Germany.

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