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Information and beliefs in a repeated normal-form game

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  • David Danz

    ()

  • Dietmar Fehr

    ()

  • Dorothea Kübler

    ()

Abstract

We study beliefs and actions in a repeated normal-form game. Using a level-k model of limited strategic reasoning and allowing for other-regarding preferences, we classify action and belief choices with regard to their strategic sophistication and study their development over time. In addition to a baseline treatment with common knowledge of the game structure, feedback about actions in the previous period and random matching, we run treatments (i) with fixed matching, (ii) without information about the other player’s payoffs, and (iii) without feedback about previous play. In all treatments with feedback, we observe more strategic play (increasing by 15 percent) and higher-level beliefs (increasing by 18 percent) over time. Without feedback, neither beliefs nor actions reach significantly higher levels of reasoning (with increases of 2 percentage points for actions and 6 percentage points for beliefs). The levels of reasoning reflected in actions and beliefs are highly consistent, but less so for types with lower levels of reasoning. Copyright Economic Science Association 2012

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Bibliographic Info

Article provided by Springer in its journal Experimental Economics.

Volume (Year): 15 (2012)
Issue (Month): 4 (December)
Pages: 622-640

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Handle: RePEc:kap:expeco:v:15:y:2012:i:4:p:622-640

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Web page: http://www.springerlink.com/link.asp?id=102888

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Keywords: Beliefs; Level-k model; Learning; C72; C92; D83; D84;

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Citations

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Cited by:
  1. Charles Manski & Claudia Neri, 2013. "First- and Second-order Subjective Expectations in Strategic Decision-Making: Experimental Evidence," 2013 Meeting Papers 73, Society for Economic Dynamics.
  2. Sutter, Matthias & Czermak, Simon & Feri, Francesco, 2010. "Strategic Sophistication of Individuals and Teams in Experimental Normal-Form Games," Working Papers in Economics 430, University of Gothenburg, Department of Economics.
  3. Dietmar Fehr & Dorothea Kübler & David Danz, 2010. "Information and Beliefs in a Repeated Normal-form Game," CIG Working Papers SP II 2010-02, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  4. Lindner, Florian & Sutter, Matthias, 2013. "Level-k reasoning and time pressure in the 11–20 money request game," Economics Letters, Elsevier, vol. 120(3), pages 542-545.
  5. Ozan Aksoy & Jeroen Weesie, 2013. "Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences," Games, MDPI, Open Access Journal, vol. 4(1), pages 66-88, February.
  6. Dorothea Kübler, 2010. "Experimental Practices in Economics: Performativity and the Creation of Phenomena," CIG Working Papers SP II 2010-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  7. Florian Artinger & Filippos Exadaktylos & Hannes Koppel & Lauri Sääksvuori, 2010. "Applying Quadratic Scoring Rule transparently in multiple choice settings: A note," Jena Economic Research Papers 2010-021, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  8. Simon Czermak & Francesco Feri & Daniela R?tzler & Matthias Sutter, 2010. "Strategic sophistication of adolescents ? Evidence from experimental normal-form games," Working Papers 2010-15, Faculty of Economics and Statistics, University of Innsbruck.
  9. Sutter, Matthias & Czermak, Simon & Feri, Francesco, 2013. "Strategic sophistication of individuals and teams. Experimental evidence," European Economic Review, Elsevier, vol. 64(C), pages 395-410.
  10. Hyndman, Kyle & Terracol, Antoine & Vaksmann, Jonathan, 2013. "Beliefs and (In)Stability in Normal-Form Games," MPRA Paper 47221, University Library of Munich, Germany.

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