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Information and Beliefs in a Repeated Normal-Form Game

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Author Info

  • Fehr, Dietmar

    ()
    (WZB - Social Science Research Center Berlin)

  • Kübler, Dorothea

    ()
    (WZB - Social Science Research Center Berlin)

  • Danz, David N.

    ()
    (Technical University of Berlin)

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 information about the opponent’s payoffs 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 check for the consistency of subjects’ actions with the stated beliefs as well as for the accuracy of their beliefs (relative to the opponent’s true choice). In the baseline treatment we observe more sophisticated play as well as more accurate beliefs and more best responses to beliefs over time. We isolate feedback as the main driving force of learning to play strategically and to form beliefs that accurately predict the behavior of the opponent.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3627.

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Length: 44 pages
Date of creation: Aug 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3627

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Keywords: beliefs; experiments; strategic uncertainty; learning;

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Citations

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Cited by:
  1. 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.
  2. Dietmar Fehr & Dorothea Kübler & David Danz, 2008. "Information and Beliefs in a Repeated Normal-form Game," SFB 649 Discussion Papers SFB649DP2008-026, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  3. 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).
  4. Neri, Claudia & Manski, Charles, 2012. "First- and Second-order Subjective Expectations in Strategic Decision-Making: Experimental Evidence," Economics Working Paper Series 1206, University of St. Gallen, School of Economics and Political Science.
  5. 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.
  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. 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.
  8. Hyndman, Kyle & Terracol, Antoine & Vaksmann, Jonathan, 2013. "Beliefs and (In)Stability in Normal-Form Games," MPRA Paper 47221, University Library of Munich, Germany.
  9. 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.
  10. 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.

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