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Three Very Simple Games and What It Takes to Solve Them

  • Ondrej Rydval

    (Max Planck Institute of Economics, Jena, Germany, and CERGE-EI)

  • Andreas Ortmann

    ()

    (CERGE-EI, Charles University Prague and Academy of Sciences of the Czech Republic)

  • Michal Ostatnicky

    (CERGE-EI, Charles University Prague and Academy of Sciences of the Czech Republic)

We study the nature of dominance violations in three minimalist dominance-solvable guessing games, featuring two or three players choosing among two or three strategies. We examine how subjects' reported reasoning translates into their choices and beliefs about others' choices, and how reasoning and choices relate to their measured cognitive and personality characteristics. Only about a third of our subjects reason in accord with dominance; they always make dominant choices and almost always expect others to do so. By contrast, around 60% of subjects describe reasoning processes inconsistent with dominance, yet a quarter of them actually make dominant choices and a fifth of them expect others to do so. Dominance violations seem to arise mainly due to subjects misrepresenting the strategic nature of the guessing games. Reasoning errors are more likely for subjects with lower ability to maintain and allocate attention, as measured by working memory, and for subjects with weaker intrinsic motivation and premeditation attitudes.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-092.

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Date of creation: 21 Nov 2007
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Handle: RePEc:jrp:jrpwrp:2007-092
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  1. 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 - Economic Institute, Prague.
  2. Miguel A. Costa-Gomes & Vincent P. Crawford, 2004. "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study," Levine's Bibliography 122247000000000113, UCLA Department of Economics.
  3. Broseta, Bruno & Costa-Gomes, Miguel & Crawford, Vincent P., 2000. "Cognition and Behavior in Normal-Form Games: An Experimental Study," University of California at San Diego, Economics Working Paper Series qt0fp8278k, Department of Economics, UC San Diego.
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  12. Grosskopf, Brit & Nagel, Rosemarie, 2008. "The two-person beauty contest," Games and Economic Behavior, Elsevier, vol. 62(1), pages 93-99, January.
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  15. Gary Charness & Dan Levin, 2005. "The Origin of the Winner’s Curse: A Laboratory Study," Levine's Bibliography 666156000000000602, UCLA Department of Economics.
  16. Miguel A. Costa-Gomes & Georg Weizs�cker, 2008. "Stated Beliefs and Play in Normal-Form Games," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 729-762.
  17. Ondrej Rydval, 2007. "Financial Incentives and Cognitive Abilities: Evidence from a Forecasting Task with Varying Cognitive Load," Jena Economic Research Papers 2007-040, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  18. Burnham, Terence C. & Cesarini, David & Wallace, Björn & Johannesson, Magnus & Lichtenstein, Paul, 2007. "Billiards and Brains: Cognitive Ability and Behavior in a p-Beauty Contest," SSE/EFI Working Paper Series in Economics and Finance 684, Stockholm School of Economics.
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