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Three Very Simple Games and What It Takes to Solve Them

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  • Ondrej Rydval,
  • Andreas Ortmann
  • Michal Ostatnicky

Abstract

We study experimentally the nature of dominance violations in three minimalist dominancesolvable guessing games. We examine how subjects’ reported reasoning processes translate into their stated choices and beliefs about others’ choices, and how both reasoning processes and choices relate to their measured cognitive and personality characteristics. Only about a third of subjects reason in line with dominance; they all make dominant choices and almost all expect others to do so. By contrast, nearly two-thirds of subjects reason inconsistently with dominance, yet a quarter of them actually make dominant choices and half of those expect others to do so. Reasoning errors are more likely for subjects with lower ability to maintain and allocate attention, as measured by working memory, and for subjects with lower intrinsic motivation and premeditation attitude. Dominance-incompatible reasoning arises mainly from subjects misrepresenting the strategic nature (payoff structure) of the guessing games.

Suggested Citation

  • Ondrej Rydval, & Andreas Ortmann & Michal Ostatnicky, 2008. "Three Very Simple Games and What It Takes to Solve Them," CERGE-EI Working Papers wp347, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp347
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    More about this item

    Keywords

    Cognition; bounded rationality; beliefs; guessing games; experiment.;
    All these keywords.

    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
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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