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Information and Beliefs in a Repeated Normal-form Game

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  • Dietmar Fehr
  • Dorothea Kübler
  • David Danz

Abstract

We study beliefs and choices in a repeated normal-form game. In addition to a baseline treatment with common knowledge of the game structure and feedback about choices in the previous period, we run treatments (i) without feedback about previous play, (ii) with no infor- mation about the opponent?s payo¤s and (iii) with random matching. Using Stahl and Wilson's (1995) model of limited strategic reasoning, we classify behavior with regard to its strategic sophistication and consider its development over time. We use belief statements to track the consistency of subjects' actions and beliefs as well as the accuracy of their beliefs (relative to the opponent's true choice) over time. In the baseline treatment we observe more sophisticated play as well as more consistent and more accurate beliefs over time. We isolate feedback as the main driving force of such learning. In contrast, information about the opponent's payoffs has almost no effect on the learning path. While it has an impact on the average choice and belief structure aggregated over all periods, it does not alter the choices and the belief accuracy in their development over time.

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Bibliographic Info

Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2008-026.

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Length: 32 pages
Date of creation: Mar 2008
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Handle: RePEc:hum:wpaper:sfb649dp2008-026

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Keywords: experiments; beliefs; strategic uncertainty; learning;

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References

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Citations

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Cited by:
  1. David Danz & Dietmar Fehr & Dorothea Kübler, 2012. "Information and beliefs in a repeated normal-form game," Experimental Economics, Springer, vol. 15(4), pages 622-640, December.
  2. 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.
  3. Sutter, Matthias & Czermak, Simon & Feri, Francesco, 2010. "Strategic Sophistication of Individuals and Teams in Experimental Normal-Form Games," IZA Discussion Papers 4732, Institute for the Study of Labor (IZA).
  4. Hyndman, Kyle & Terracol, Antoine & Vaksmann, Jonathan, 2013. "Beliefs and (In)Stability in Normal-Form Games," MPRA Paper 47221, University Library of Munich, Germany.
  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. 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.
  7. Florian Lindner & Matthias Sutter, 2013. "Level-k reasoning and time pressure in the 11-20 money request game," Working Papers 2013-13, Faculty of Economics and Statistics, University of Innsbruck.
  8. 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).
  9. 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).
  10. Manski, Charles F. & Neri, Claudia, 2013. "First- and second-order subjective expectations in strategic decision-making: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 81(C), pages 232-254.

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