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Information and beliefs in a repeated normal-form game

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  • David Danz

    ()

  • Dietmar Fehr

    ()

  • Dorothea Kübler

    ()

Abstract

We study beliefs and actions in a repeated normal-form game. Using a level-k model of limited strategic reasoning and allowing for other-regarding preferences, we classify action and belief choices with regard to their strategic sophistication and study their development over time. In addition to a baseline treatment with common knowledge of the game structure, feedback about actions in the previous period and random matching, we run treatments (i) with fixed matching, (ii) without information about the other player’s payoffs, and (iii) without feedback about previous play. In all treatments with feedback, we observe more strategic play (increasing by 15 percent) and higher-level beliefs (increasing by 18 percent) over time. Without feedback, neither beliefs nor actions reach significantly higher levels of reasoning (with increases of 2 percentage points for actions and 6 percentage points for beliefs). The levels of reasoning reflected in actions and beliefs are highly consistent, but less so for types with lower levels of reasoning. Copyright Economic Science Association 2012

Suggested Citation

  • David Danz & Dietmar Fehr & Dorothea Kübler, 2012. "Information and beliefs in a repeated normal-form game," Experimental Economics, Springer;Economic Science Association, vol. 15(4), pages 622-640, December.
  • Handle: RePEc:kap:expeco:v:15:y:2012:i:4:p:622-640 DOI: 10.1007/s10683-012-9317-9
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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," IZA Discussion Papers 4732, Institute for the Study of Labor (IZA).
    2. 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).
    3. Hyndman, Kyle & Terracol, Antoine & Vaksmann, Jonathan, 2013. "Beliefs and (In)Stability in Normal-Form Games," MPRA Paper 47221, University Library of Munich, Germany.
    4. Armantier, Olivier & Treich, Nicolas, 2013. "Eliciting beliefs: Proper scoring rules, incentives, stakes and hedging," European Economic Review, Elsevier, vol. 62(C), pages 17-40.
    5. David Danz & Dietmar Fehr & Dorothea Kübler, 2012. "Information and beliefs in a repeated normal-form game," Experimental Economics, Springer;Economic Science Association, pages 622-640.
    6. Evdokimov, Piotr & Rustichini, Aldo, 2016. "Forward induction: Thinking and behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 195-208.
    7. 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.
    8. Florian Artinger & Filippos Exadaktylos & Hannes Koppel & Lauri Sääksvuori, 2010. "Applying Quadratic Scoring Rule transparently in multiple choice settings: A note," Jena Economic Research Papers 2010-021, Friedrich-Schiller-University Jena.
    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 1-23, 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.
    11. Claudia Neri, 2015. "Eliciting beliefs in continuous-choice games: a double auction experiment," Experimental Economics, Springer;Economic Science Association, pages 569-608.
    12. Joseph Clougherty, 2010. "Competition Policy Trends and Economic Growth: Cross-National Empirical Evidence," International Journal of the Economics of Business, Taylor & Francis Journals, pages 111-127.
    13. Andrea Leiter & Gerald Pruckner, 2009. "Proportionality of Willingness to Pay to Small Changes in Risk: The Impact of Attitudinal Factors in Scope Tests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(2), pages 169-186, February.
    14. Charness, Gary & Gneezy, Uri & Halladay, Brianna, 2016. "Experimental methods: Pay one or pay all," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 141-150.
    15. Lindner, Florian & Sutter, Matthias, 2013. "Level-k reasoning and time pressure in the 11–20 money request game," Economics Letters, Elsevier, pages 542-545.
    16. repec:kap:theord:v:82:y:2017:i:4:d:10.1007_s11238-016-9579-3 is not listed on IDEAS
    17. Jordi Brandts & David J. Cooper, 2015. "Centralized vs. Decentralized Management: an Experimental Study," Working Papers 854, Barcelona Graduate School of Economics.
    18. Flip Klijn & Marc Vorsatz, 2017. "Outsourcing with identical suppliers and shortest-first policy: a laboratory experiment," Theory and Decision, Springer, pages 597-615.
    19. Simon Czermak & Francesco Feri & Daniela R?tzler & Matthias Sutter, 2010. "Strategic sophistication of adolescents ? Evidence from experimental normal-form games," Working Papers 2010-15, Faculty of Economics and Statistics, University of Innsbruck.
    20. 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.
    21. Czermak, Simon & Feri, Francesco & Glätzle-Rützler, Daniela & Sutter, Matthias, 2016. "How strategic are children and adolescents? Experimental evidence from normal-form games," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 265-285.

    More about this item

    Keywords

    Beliefs; Level-k model; Learning; C72; C92; D83; D84;

    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
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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