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Anchored Strategic Reasoning

Author

Listed:
  • Ivanova-Stenzel, Radosveta

    (TU Berlin)

  • Seres, Gyula

    (HU Berlin)

Abstract

Anchoring is a robust behavioral phenomenon modeled predominantly as a bias in individual judgment. We propose a game-theoretic model that considers players’ beliefs about others’ behavior as a mediator for the effect of the anchor on a player’s choice. The results establish that anchoring in strategic interactions reported in the literature can be rationalized by anchored beliefs about the opponents’ intentions. Notwithstanding, we also demonstrate that a player might adjust away from rather than toward the anchor in games where choices are strategic substitutes.

Suggested Citation

  • Ivanova-Stenzel, Radosveta & Seres, Gyula, 2022. "Anchored Strategic Reasoning," Rationality and Competition Discussion Paper Series 314, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:314
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    References listed on IDEAS

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    Cited by:

    1. Yigit Oezcelik & Michel Tolksdorf, 2023. "Non-numerical and social anchoring in consumer-generated ratings," Working Papers 202319, University of Liverpool, Department of Economics.

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    More about this item

    Keywords

    anchoring bias; auctions; games; incomplete information; strategy;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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