IDEAS home Printed from https://ideas.repec.org/p/jrp/jrpwrp/2012-051.html
   My bibliography  Save this paper

Availability of Information and Representation Effects in the Centipede Game

Author

Listed:
  • Paolo Crosetto

    (Max Planck Institute of Economics, Strategic Interaction Group, Jena)

  • Marco Mantovani

    (Université Libre de Bruxelles, and DEMM, Università degli studi di Milano, and CEREC, Facultés Universitaires Saint-Louis)

Abstract

The paper presents the results of a novel experiment testing the effects of environment complexity on strategic behavior, using a centipede game. Behavior in the centipede game has been explained either by appealing to failures of backward induction or by calling for preferences that induce equilibria consistent with observed behavior. By manipulating the way in which information is provided to subjects we show that reduced availability of information is sufficient to shift the distribution of take-nodes further from the equilibrium prediction. On the other hand, similar results are obtained in a treatment where reduced availability of information is combined with an attempt to elicit preferences for reciprocity, through the presentation of the centipede as a repeated trust game. Our results could be interpreted as cognitive limitations being more effective than preferences in determining (shifts in) behavior in our experimental centipede. Furthermore our results are at odds with the recent ones in Cox and James (2012), suggesting caution in generalizing their results. Reducing the availability of information may hamper backward induction or induce myopic behavior, depending on the strategic environment.

Suggested Citation

  • Paolo Crosetto & Marco Mantovani, 2012. "Availability of Information and Representation Effects in the Centipede Game," Jena Economics Research Papers 2012-051, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2012-051
    as

    Download full text from publisher

    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2012/wp_2012_051.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ponti, Giovanni, 2000. "Cycles of Learning in the Centipede Game," Games and Economic Behavior, Elsevier, vol. 30(1), pages 115-141, January.
    2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    3. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-836, July.
    4. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    5. Ignacio Palacios-Huerta & Oscar Volij, 2009. "Field Centipedes," American Economic Review, American Economic Association, vol. 99(4), pages 1619-1635, September.
    6. Duffy, Sean & Smith, John, 2011. "Cognitive load in the multi-player prisoner's dilemma game," MPRA Paper 30856, University Library of Munich, Germany.
    7. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    8. Devetag, Giovanna & Warglien, Massimo, 2003. "Games and phone numbers: Do short-term memory bounds affect strategic behavior?," Journal of Economic Psychology, Elsevier, vol. 24(2), pages 189-202, April.
    9. Shiv, Baba & Fedorikhin, Alexander, 1999. "Heart and Mind in Conflict: The Interplay of Affect and Cognition in Consumer Decision Making," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 26(3), pages 278-292, December.
    10. Duffy, Sean & Smith, John, 2014. "Cognitive load in the multi-player prisoner's dilemma game: Are there brains in games?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 51(C), pages 47-56.
    11. repec:feb:artefa:0097 is not listed on IDEAS
    12. Fey, Mark & McKelvey, Richard D & Palfrey, Thomas R, 1996. "An Experimental Study of Constant-Sum Centipede Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 25(3), pages 269-287.
    13. Zauner, Klaus G., 1999. "A Payoff Uncertainty Explanation of Results in Experimental Centipede Games," Games and Economic Behavior, Elsevier, vol. 26(1), pages 157-185, January.
    14. Rapoport, Amnon & Stein, William E. & Parco, James E. & Nicholas, Thomas E., 2003. "Equilibrium play and adaptive learning in a three-person centipede game," Games and Economic Behavior, Elsevier, vol. 43(2), pages 239-265, May.
    15. Steven D. Levitt & John A. List & Sally E. Sadoff, 2011. "Checkmate: Exploring Backward Induction among Chess Players," American Economic Review, American Economic Association, vol. 101(2), pages 975-990, April.
    16. Rosenthal, Robert W., 1981. "Games of perfect information, predatory pricing and the chain-store paradox," Journal of Economic Theory, Elsevier, vol. 25(1), pages 92-100, August.
    17. Cappelletti, Dominique & Güth, Werner & Ploner, Matteo, 2011. "Being of two minds: Ultimatum offers under cognitive constraints," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 940-950.
    18. James C. Cox & Duncan James, 2012. "Clocks and Trees: Isomorphic Dutch Auctions and Centipede Games," Econometrica, Econometric Society, vol. 80(2), pages 883-903, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marco Mantovani, 2015. "Limited backward induction: foresight and behavior in sequential games," Working Papers 289, University of Milano-Bicocca, Department of Economics, revised Jan 2015.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paolo Crosetto & Marco Mantovani, 2018. "Representation effects in the centipede game," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-13, October.
    2. García-Pola, Bernardo & Iriberri, Nagore & Kovářík, Jaromír, 2020. "Non-equilibrium play in centipede games," Games and Economic Behavior, Elsevier, vol. 120(C), pages 391-433.
    3. Spenkuch, Jörg, 2014. "Backward Induction in the Wild: Evidence from the U.S. Senate," MPRA Paper 58766, University Library of Munich, Germany.
    4. Bernardo García-Pola & Nagore Iriberri & Jaromír Kovářík, 2020. "Hot versus cold behavior in centipede games," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 6(2), pages 226-238, December.
    5. Kulesz, Micaela M. & Dittrich, Dennis A. V., 2014. "Intergenerational Cooperation: an Experimental Study on Beliefs," MPRA Paper 58584, University Library of Munich, Germany.
    6. Kawagoe, Toshiji & Takizawa, Hirokazu, 2012. "Level-k analysis of experimental centipede games," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 548-566.
    7. Allred, Sarah & Duffy, Sean & Smith, John, 2016. "Cognitive load and strategic sophistication," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 162-178.
    8. Yun Wang, 2015. "Belief and Higher-Order Belief in the Centipede Games: Theory and Experiment," Working Papers 2015-03-24, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    9. James C. Cox & Vjollca Sadiraj, 2018. "Incentives," Experimental Economics Center Working Paper Series 2018-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    10. Steven D. Levitt & John A. List & Sally E. Sadoff, 2011. "Checkmate: Exploring Backward Induction among Chess Players," American Economic Review, American Economic Association, vol. 101(2), pages 975-990, April.
    11. Eva M. Krockow & Briony D. Pulford & Andrew M. Colman, 2015. "Competitive Centipede Games: Zero-End Payoffs and Payoff Inequality Deter Reciprocal Cooperation," Games, MDPI, vol. 6(3), pages 1-11, August.
    12. Philippe Gillen & Alexander Rasch & Achim Wambach & Peter Werner, 2016. "Bid pooling in reverse multi-unit Dutch auctions: an experimental investigation," Theory and Decision, Springer, vol. 81(4), pages 511-534, November.
    13. Cardella, Eric, 2012. "Learning to make better strategic decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 382-392.
    14. Dan Levin & Luyao Zhang, 2022. "Bridging Level-K to Nash Equilibrium," Papers 2202.12292, arXiv.org, revised Feb 2022.
    15. Konrad Grabiszewski & Alex Horenstein, 2022. "Profiling dynamic decision-makers," PLOS ONE, Public Library of Science, vol. 17(4), pages 1-22, April.
    16. Egbert, Henrik, 2017. "The Gift and the Centipede," MPRA Paper 80324, University Library of Munich, Germany.
    17. Duffy, Sean & Naddeo, JJ & Owens, David & Smith, John, 2016. "Cognitive load and mixed strategies: On brains and minimax," MPRA Paper 71878, University Library of Munich, Germany.
    18. Brosig-Koch, Jeannette & Heinrich, Timo & Helbach, Christoph, 2015. "Exploring the capability to reason backwards: An experimental study with children, adolescents, and young adults," European Economic Review, Elsevier, vol. 74(C), pages 286-302.
    19. Jeannette Brosig-Koch & Timo Heinrich & Christoph Helbach, 2012. "Exploring the Capability to Backward Induct – An Experimental Study with Children and Young Adults," Ruhr Economic Papers 0360, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    20. repec:zbw:rwirep:0360 is not listed on IDEAS
    21. James Tremewan & Chloé Le Coq & Alexander D. Wagner, 2013. "Social Centipedes: the Impact of Group Identity on Preferences and Reasoning," Vienna Economics Papers 1305, University of Vienna, Department of Economics.

    More about this item

    Keywords

    Centipede; Backward Induction; Representation effects;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jrp:jrpwrp:2012-051. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Markus Pasche (email available below). General contact details of provider: http://www.jenecon.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.