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Playing the wrong game: An experimental analysis of relational complexity and strategic misrepresentation

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  • Giovanna Devetag

    ()

  • Massimo Warglien

    ()

Abstract

It has been suggested that players often produce simplified and/or misspecified mental representations of interactive decision problems (Kreps, 1990). We submit that the relational structure of players’ preferences in a game induces cognitive complexity, and may be an important driver of such simplifications. We provide a formal classification of order structures in two-person normal form games based on the two properties of monotonicity and projectivity, and present experiments in which subjects must first construct a representation of games of different relational complexity, and subsequently play the games according to their own representation. Experimental results support the hypothesis that relational complexity matters. More complex games are harder to represent, and this difficulty is correlated with measures of short term memory capacity. Furthermore, most erroneous representations are less complex than the correct ones. In addition, subjects who misrepresent the games behave consistently with such representations according to simple but rational decision criteria. This suggests that in many strategic settings individuals may act optimally on the ground of simplified and mistaken premises.

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Bibliographic Info

Paper provided by Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia in its series CEEL Working Papers with number 0504.

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Date of creation: 2005
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Handle: RePEc:trn:utwpce:0504

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Keywords: pure motive; mixed motive; preferences; bi-orders; language; cognition; projectivity; monotonicity; short term memory; experiments;

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  1. Rubinstein, A., 1998. "Economics and Language," Papers 14-98, Tel Aviv.
  2. Stahl, Dale II & Wilson, Paul W., 1994. "Experimental evidence on players' models of other players," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 309-327, December.
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  4. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December.
  5. Giovanna Devetag & Massimo Warglien, 2002. "Games and Phone Numbers: Do Short Term Memory Bounds Affect Strategy Behavior?," ROCK Working Papers 018, Department of Computer and Management Sciences, University of Trento, Italy, revised 13 Jun 2008.
  6. 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.
  7. Pillutla, Madan M. & Chen, Xiao-Ping, 1999. "Social Norms and Cooperation in Social Dilemmas: The Effects of Context and Feedback, , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 78(2), pages 81-103, May.
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  11. Nagel, Rosemarie, 1993. "Experimental Results on Interactive Competitive Guessing," Discussion Paper Serie B 236, University of Bonn, Germany.
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Cited by:
  1. Giovanna Devetag & Andreas Ortmann, 2006. "When and Why? A Critical Survey on Coordination Failure in the Laboratory," CERGE-EI Working Papers wp302, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. Andreas Nicklisch, 2006. "Perceiving strategic environments: An experimental study of learning under minimal information," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_17, Max Planck Institute for Research on Collective Goods.
  3. Rydval, Ondrej & Ortmann, Andreas & Ostatnicky, Michal, 2009. "Three very simple games and what it takes to solve them," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 589-601, October.
  4. Giovanna Devetag & Sibilla Di Guida, 2010. "Feature-based Choice and Similarity in Normal-form Games: An Experimental Study," DISA Working Papers 1007, Department of Computer and Management Sciences, University of Trento, Italy, revised 03 Nov 2010.
  5. Andreas Nicklisch, 2011. "Learning strategic environments: an experimental study of strategy formation and transfer," Theory and Decision, Springer, vol. 71(4), pages 539-558, October.
  6. Huck, Steffen & Jehiel, Philippe & Rutter, Tom, 2011. "Feedback spillover and analogy-based expectations: A multi-game experiment," Games and Economic Behavior, Elsevier, vol. 71(2), pages 351-365, March.
  7. Page, Lionel & Page, Katie, 2010. "Last shall be first: A field study of biases in sequential performance evaluation on the Idol series," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 186-198, February.

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