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Strategic Sophistication of Individuals and Teams in Experimental Normal-Form Games

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  • Sutter, Matthias

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Czermak, Simon

    (Department of Public Finance, University of Innsbruck)

  • Feri, Francesco

    (Department of Public Finance, University of Innsbruck)

Abstract

We present an experiment on strategic thinking and behavior of individuals and teams in oneshot normal-form games. Besides making choices, decision makers have to state their firstand second-order beliefs. We find that teams play the Nash strategy significantly more often, and their choices are more often consistent by being a best reply to first order beliefs. We identify the complexity of a game and the payoffs in equilibrium as determining the likelihood of consistent behavior according to textbook rationality. Using a mixture model, the estimated probability to play strategically is 62% for teams, but only 40% for individuals.

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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 430.

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Length: 56 pages
Date of creation: 01 Feb 2010
Date of revision:
Handle: RePEc:hhs:gunwpe:0430

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: Strategic sophistication; beliefs; experiment; team decision making; individual decision making;

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References

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Cited by:
  1. Kugler, Tamar & Kausel, E.E. & Kocher, Martin G., 2012. "Are groups more rational than individuals? A review of interactive decision making in groups," Munich Reprints in Economics 18215, University of Munich, Department of Economics.
  2. Czermak, Simon & Feri, Francesco & Glätzle-Rützler, Daniela & Sutter, Matthias, 2010. "Strategic Sophistication of Adolescents: Evidence from Experimental Normal-Form Games," IZA Discussion Papers 5049, Institute for the Study of Labor (IZA).

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