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Level-n Bounded Rationality on a Level Playing Field of Sequential Games

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Author Info
Ernan Haruvy
Dale Stahl
Abstract

We report experimental results using a multi-task for simple two-player, two- stage extensive-form games. It is suggested that by creating the perception of a "level playing field" the participants are relieved of responsibility for others since competition on a level playing field is presumed to be fair a priori. Consistent with this suggestion, we find that the vast majority of behavior is individualistic. Moreover, we find that a straightforward extension of the Level-n theory of bounded rationality fits this data remarkably well. We also extend this theory to allow other-regarding preferences, and find that about 15% of the population behaves as if utilitarian and/or spiteful

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Paper provided by Econometric Society in its series Econometric Society 2004 North American Winter Meetings with number 126.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nawm04:126

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Related research
Keywords: Bounded rationality; sequential games;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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  1. 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)
  2. Cox, James C & Smith, Vernon L & Walker, James M, 1985. "Experimental Development of Sealed-Bid Auction Theory: Calibrating Controls for Risk Aversion," American Economic Review, American Economic Association, vol. 75(2), pages 160-65, May. [Downloadable!] (restricted)
  3. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December. [Downloadable!] (restricted)
  4. Stahl, Dale O., 2000. "Rule Learning in Symmetric Normal-Form Games: Theory and Evidence," Games and Economic Behavior, Elsevier, vol. 32(1), pages 105-138, July. [Downloadable!] (restricted)
  5. Werner Güth & Hartmut Kliemt & Bezalel Peleg, 2000. "Co-evolution of Preferences and Information in Simple Games of Trust," German Economic Review, Blackwell Publishing, vol. 1(1), pages 83-110, 02. [Downloadable!] (restricted)
    Other versions:
  6. Isaac, R Mark & Walker, James M, 1988. "Group Size Effects in Public Goods Provision: The Voluntary Contributions Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 179-99, February. [Downloadable!] (restricted)
  7. Cox, James C & Smith, Vernon L & Walker, James M, 1988. " Theory and Individual Behavior of First-Price Auctions," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 61-99, March.
  8. Thaler, Richard H, 1988. "The Ultimatum Game," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 195-206, Fall. [Downloadable!] (restricted)
  9. Gary Charness & Matthew Rabin, 2003. "Understanding Social Preferences with Simple Tests," General Economics and Teaching 0303002, EconWPA. [Downloadable!]
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  10. Ernan Haruvy & Dale O. Stahl & Paul W. Wilson, 2001. "Modeling And Testing For Heterogeneity In Observed Strategic Behavior," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 146-157, February. [Downloadable!] (restricted)
  11. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December. [Downloadable!] (restricted)
  12. Cox, James C. & Friedman, Daniel & Gjerstad, Steven, 2007. "A tractable model of reciprocity and fairness," Games and Economic Behavior, Elsevier, vol. 59(1), pages 17-45, April. [Downloadable!] (restricted)
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  13. Nagel, Rosemarie, 1995. "Unraveling in Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 85(5), pages 1313-26, December. [Downloadable!] (restricted)
  14. Cox, James C & Oaxaca, Ronald L, 1995. "Inducing Risk-Neutral Preferences: Further Analysis of the Data," Journal of Risk and Uncertainty, Springer, vol. 11(1), pages 65-79, July.
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  16. Walker, James M & Smith, Vernon L & Cox, James C, 1990. " Inducing Risk-Neutral Preferences: An Examination in a Controlled Market Environment," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 5-24, March.
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  19. Andereoni, J., 1988. "Why Free Ride? Strategies And Learning In Public Goods Experiments," Working papers 375, Wisconsin Madison - Social Systems.
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