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A model of noisy introspection

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  • Goeree, Jacob K.
  • Holt, Charles A.

Abstract

This paper presents a theoretical model of noisy introspection designed to explain behavior in games played only once. The equilibrium determines layers of beliefs about others' beliefs about ..., etc., but allows for surprises by relaxing the equilibrium requirement that belief distributions coincide with decision distributions. The paper contains a convergence proof and reports estimated introspection and error parameters for data from 37 one-shot matrix games. The accuracy of the model is compared with that of two alternative approaches: the Nash equilibrium and the logit quantal response equilibrium.
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Suggested Citation

  • Goeree, Jacob K. & Holt, Charles A., 2004. "A model of noisy introspection," Games and Economic Behavior, Elsevier, vol. 46(2), pages 365-382, February.
  • Handle: RePEc:eee:gamebe:v:46:y:2004:i:2:p:365-382
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    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, December.
    2. Stahl Dale O. & Wilson Paul W., 1995. "On Players' Models of Other Players: Theory and Experimental Evidence," Games and Economic Behavior, Elsevier, vol. 10(1), pages 218-254, July.
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    4. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-1028, July.
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    7. Charles A. Holt & Jacob K. Goeree, 1999. "Stochastic Game Theory: For Playing Games, Not Just for Doing Theory," Virginia Economics Online Papers 306, University of Virginia, Department of Economics.
    8. Olcina, Gonzalo & Urbano, Amparo, 1994. "Introspection and Equilibrium Selection in 2 x 22 Matrix Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 23(3), pages 183-206.
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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