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Investigating the failure to best respond in experimental games

Author

Listed:
  • Despoina Alempaki

    (University of Warwick)

  • Andrew M. Colman

    (University of Leicester)

  • Felix Kölle

    (University of Nottingham
    University of Cologne)

  • Graham Loomes

    (University of Warwick)

  • Briony D. Pulford

    (University of Leicester)

Abstract

We examine strategic sophistication using eight two-person 3 × 3 one-shot games. To facilitate strategic thinking, we design a ‘structured’ environment where subjects first assign subjective values to the payoff pairs and state their beliefs about their counterparts’ probable strategies, before selecting their own strategies in light of those deliberations. Our results show that a majority of strategy choices are inconsistent with the equilibrium prediction, and that only just over half of strategy choices constitute best responses to subjects’ stated beliefs. Allowing for other-regarding considerations increases best responding significantly, but the increase is rather small. We further compare patterns of strategies with those made in an ‘unstructured’ environment in which subjects are not specifically directed to think strategically. Our data suggest that structuring the pre-decision deliberation process does not affect strategic sophistication.

Suggested Citation

  • Despoina Alempaki & Andrew M. Colman & Felix Kölle & Graham Loomes & Briony D. Pulford, 2022. "Investigating the failure to best respond in experimental games," Experimental Economics, Springer;Economic Science Association, vol. 25(2), pages 656-679, April.
  • Handle: RePEc:kap:expeco:v:25:y:2022:i:2:d:10.1007_s10683-021-09725-8
    DOI: 10.1007/s10683-021-09725-8
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    More about this item

    Keywords

    Equilibrium; Best response; Strategic thinking; Social preferences; Beliefs;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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