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Beliefs and (in)stability in normal-form games

Author

Listed:
  • Kyle Hyndman

    (UT Dallas - University of Texas at Dallas [Richardson])

  • Antoine Terracol

    (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8)

  • Jonathan Vaksmann

    (GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université)

Abstract

In this paper, we use experimental data to study players' stability in normal-form games where subjects have to report beliefs and choose actions. Subjects saw each of 12 games four times in a regular or isomorphic form spread over two days without feedback. We document a high degree of stability within the same (strategically equivalent) game, although time and changes in the presentation of the game do lead to less stability. To look at stability across different games, we adopt the level-k theory, and show that stability of both beliefs and actions is significantly lower. Finally, we estimate a structural model in which players either apply a consistent level of reasoning across strategically different games, or reasoning levels change from game to game. Our results show that approximately 23% of subjects apply a consistent level of reasoning across the 12 games, but that they assign a low level of sophistication to their opponent. The remaining 77% apply different levels of reasoning to different games. We show that this may be due to subjects being attracted to the action with the highest possible payoff.

Suggested Citation

  • Kyle Hyndman & Antoine Terracol & Jonathan Vaksmann, 2022. "Beliefs and (in)stability in normal-form games," Post-Print hal-03709691, HAL.
    • Handle: RePEc:hal:journl:hal-03709691
    DOI: 10.1007/s10683-022-09747-w
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    Cited by:

    1. Heller, Yuval, 2015. "Three steps ahead," Theoretical Economics, Econometric Society, vol. 10(1), January.
    2. Wolff, Irenaeus, 2025. "Heuristic centred-belief players," Journal of Economic Psychology, Elsevier, vol. 108(C).
    3. Irving Argaez Corona & Béatrice Boulu-Reshef & Jean-Christophe Vergnaud, 2025. "More Predictable, Less Cooperative: The Effects of Personality Disclosure in Strategic Interaction [Plus prévisible, moins coopératif : les effets de la divulgation des traits de personnalité dans l’interaction stratégique]," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-05393326, HAL.
    4. Dominik Bauer & Irenaeus Wolff, 2018. "Biases in Beliefs: Experimental Evidence," TWI Research Paper Series 109, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    5. Todd Larson Landes & Piers Douglas Howe & Yoshihisa Kashima, 2021. "A hierarchy of mindreading strategies in joint action participation," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(4), pages 844-897, July.
    6. Charness, Gary & Gneezy, Uri & Rasocha, Vlastimil, 2021. "Experimental methods: Eliciting beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 234-256.

    More about this item

    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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