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Strategic Sophistication of Individuals and Teams in Experimental Normal-Form Games

  • Sutter, Matthias

    ()

    (University of Cologne)

  • Czermak, Simon

    ()

    (University of Innsbruck)

  • Feri, Francesco

    ()

    (University of Innsbruck)

We present an experiment on strategic thinking and behavior of individuals and teams in one-shot normal-form games. Besides making choices, decision makers have to state their first- and second-order beliefs. We find that teams play the Nash strategy significantly more often, and their choices are more often consistent by being a best reply to first order beliefs. We identify the complexity of a game and the payoffs in equilibrium as determining the likelihood of consistent behavior according to textbook rationality. Using a mixture model, the estimated probability to play strategically is 62% for teams, but only 40% for individuals.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4732.

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Length: 57 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:iza:izadps:dp4732
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