Order of Play, Forward Induction, and Presentation Effects in Two-Person Games
We investigate the effects of order-of-play (simultaneous, unobserved sequential and fully observed sequential play) and form of presentation (extensive vs. normal) in three simple two person games: battle-of-the-sexes with and without outside option and a three strategy game which differentiates between virtual observability (VO) and iterated elimination of dominated strategies as principles of equilibrium selection. VO predicts that knowledge of the order of play alone will affect the distribution of strategies chosen. We contrast this with the predictions of iterated elimination of dominated strategies. We report results from 1800 one-shot games conducted in 6 sessions with 120 subjects and analysed as panel data. The form of presentation strongly affects the distribution of outcomes and strategies. Information about order of play shifts the distribution of strategies away from the distribution in simultaneous play and towards the distribution in fully observed play, especially in the less complicated games presented in normal order. Order-of-play effects are less evident as complexity of the game increases. Extensive form presentation appears to induce sequential thinking even in simultaneously played games. Copyright Kluwer Academic Publishers 2003
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