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Feature-based Choice and Similarity in Normal-form Games: An Experimental Study

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  • Giovanna Devetag
  • Sibilla Di Guida

Abstract

In this paper, we test the effect of descriptive "features" on initial strategic behavior in normal form games, where the term "descriptive" indicates all those features which can be modified without altering the (Nash) equilibrium structure of a game. Our experimental subjects behaved according to some simple heuristics based on descriptive features, and we observed that these heuristics were stable even across strategically different games. These findings indicate the need to incorporate descriptive features into models describing strategic sophistication in normal form games. Analysis of choice patterns and individual behavior indicates that non-equilibrium choices may derive from incorrect and simplified mental representations of the game structure, rather than from beliefs in other players' irrationality. We suggest how level-k and cognitive hierarchy models might be extended to account for heuristic-based and feature-based behavior.

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Bibliographic Info

Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2010/18.

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Date of creation: 09 Oct 2010
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Handle: RePEc:ssa:lemwps:2010/18

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Keywords: normal form games; one-shot games; response times; dominance; similarity; categorization; focal points; individual behavior;

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References

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  1. Ariel Rubinstein, 2006. "Instinctive and Cognitive Reasoning: A Study of Response Times," Discussion Papers 1424, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Ondrej Rydval & Andreas Ortmann & Michal Ostatnicky, 2007. "Three Very Simple Games and What It Takes to Solve Them," Jena Economic Research Papers 2007-092, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  3. Cooper, David J. & Van Huyck, John B., 2003. "Evidence on the equivalence of the strategic and extensive form representation of games," Journal of Economic Theory, Elsevier, vol. 110(2), pages 290-308, June.
  4. Leland, Jonathan W, 1994. "Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies," Journal of Risk and Uncertainty, Springer, vol. 9(2), pages 151-72, October.
  5. Rubinstein, Ariel, 1988. "Similarity and decision-making under risk (is there a utility theory resolution to the Allais paradox?)," Journal of Economic Theory, Elsevier, vol. 46(1), pages 145-153, October.
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  7. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
  8. Giovanna Devetag & Massimo Warglien, 2005. "Playing the wrong game: An experimental analysis of relational complexity and strategic misrepresentation," CEEL Working Papers 0504, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
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  12. Stahl, Dale O. & Haruvy, Ernan, 2008. "Level-n bounded rationality and dominated strategies in normal-form games," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 226-232, May.
  13. Costa-Gomes, Miguel & Crawford, Vincent P & Broseta, Bruno, 2001. "Cognition and Behavior in Normal-Form Games: An Experimental Study," Econometrica, Econometric Society, vol. 69(5), pages 1193-1235, September.
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  17. Piovesan, Marco & Wengström, Erik, 2009. "Fast or fair? A study of response times," Economics Letters, Elsevier, vol. 105(2), pages 193-196, November.
  18. Vincent P. Crawford & Uri Gneezy & Yuval Rottenstreich, 2008. "The Power of Focal Points Is Limited: Even Minute Payoff Asymmetry May Yield Large Coordination Failures," American Economic Review, American Economic Association, vol. 98(4), pages 1443-58, September.
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  20. Miguel A. Costa-Gomes & Georg Weizs�cker, 2008. "Stated Beliefs and Play in Normal-Form Games," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 729-762.
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Cited by:
  1. Giovanna Devetag & Sibilla Di Guida & Luca Polonio, 2013. "An eye-tracking study of feature-based choice in one-shot games," LEM Papers Series 2013/05, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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