Imagine-self perspective-taking and Nash behavior

We hypothesize that introduction of imagine-self perspective-taking by decision-makers promotes Nash choices in a simple experimental normal-form game. In particular, we examined behavior of 404 undergraduate students in the experimental game, in which row player can suffer a monetary loss only if (1) she plays her Nash equilibrium pure strategy and (2) the other player plays her dominated pure strategy. Results suggest that the threat of suffering monetary losses effectively discourages the row players from choosing Nash equilibrium strategy. The row players can rationally take the possibility of playing dominated strategy by column players into account. The column players can play dominated strategy either because of their not full rationality or their specific not self-interested motivation. However, adopting imagine-self perspective by the row players seems to effectively shorten the psychological distance between them and the column players, alleviate attributing (by row players) (i) a susceptibility to errors (ii) and/or some non-self-interested motivations to the column players and in effect promote Nash equilibrium choices in the proposed experimental game. The imagine-self-self-interest link is further postulated and succinctly discussed in the context of relevant psychological and economic literature.