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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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Citations

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Cited by:
  1. Lindner, Florian & Sutter, Matthias, 2013. "Level-k reasoning and time pressure in the 11-20 money request game," Munich Reprints in Economics, University of Munich, Department of Economics 19234, University of Munich, Department of Economics.
  2. Dietmar Fehr & Dorothea Kübler & David Danz, 2010. "Information and Beliefs in a Repeated Normal-form Game," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) SP II 2010-02, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  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. Manski, Charles F. & Neri, Claudia, 2013. "First- and second-order subjective expectations in strategic decision-making: Experimental evidence," Games and Economic Behavior, Elsevier, Elsevier, vol. 81(C), pages 232-254.
  5. Florian Artinger & Filippos Exadaktylos & Hannes Koppel & Lauri Sääksvuori, 2010. "Applying Quadratic Scoring Rule transparently in multiple choice settings: A note," ThE Papers, Department of Economic Theory and Economic History of the University of Granada. 10/01, Department of Economic Theory and Economic History of the University of Granada..
  6. Dorothea Kübler, 2010. "Experimental Practices in Economics: Performativity and the Creation of Phenomena," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) SP II 2010-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  7. Hyndman, Kyle & Terracol, Antoine & Vaksmann, Jonathan, 2013. "Beliefs and (In)Stability in Normal-Form Games," MPRA Paper 47221, University Library of Munich, Germany.
  8. 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).
  9. Ozan Aksoy & Jeroen Weesie, 2013. "Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences," Games, MDPI, Open Access Journal, MDPI, Open Access Journal, vol. 4(1), pages 66-88, February.
  10. Sutter, Matthias & Czermak, Simon & Feri, Francesco, 2013. "Strategic sophistication of individuals and teams. Experimental evidence," European Economic Review, Elsevier, Elsevier, vol. 64(C), pages 395-410.

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