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Playing the wrong game: An experimental analysis of relational complexity and strategic misrepresentation

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  • Giovanna Devetag

    ()

  • Massimo Warglien

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Abstract

It has been suggested that players often produce simplified and/or misspecified mental representations of interactive decision problems (Kreps, 1990). We submit that the relational structure of players� preferences in a game induces cognitive complexity, and may be an important driver of such simplifications. We provide a formal classification of order structures in two-person normal form games based on the two properties of monotonicity and projectivity, and present experiments in which subjects must first construct a representation of games of different relational complexity, and subsequently play the games according to their own representation. Experimental results support the hypothesis that relational complexity matters. More complex games are harder to represent, and this difficulty is correlated with measures of short term memory capacity. Furthermore, most erroneous representations are less complex than the correct ones. In addition, subjects who misrepresent the games behave consistently with such representations according to simple but rational decision criteria. This suggests that in many strategic settings individuals may act optimally on the ground of simplified and mistaken premises.

Suggested Citation

  • Giovanna Devetag & Massimo Warglien, 2005. "Playing the wrong game: An experimental analysis of relational complexity and strategic misrepresentation," CEEL Working Papers 0504, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    • Handle: RePEc:trn:utwpce:0504
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    File URL: http://www-ceel.economia.unitn.it/papers/papero05_04.pdf
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    References listed on IDEAS

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    1. Rubinstein,Ariel, 2000. "Economics and Language," Cambridge Books, Cambridge University Press, number 9780521593069.
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    5. Devetag, Giovanna & Warglien, Massimo, 2003. "Games and phone numbers: Do short-term memory bounds affect strategic behavior?," Journal of Economic Psychology, Elsevier, vol. 24(2), pages 189-202, April.
    6. Costa-Gomes, Miguel & Crawford, Vincent P & Broseta, Bruno, 2001. "Cognition and Behavior in Normal-Form Games: An Experimental Study," Econometrica, Econometric Society, vol. 69(5), pages 1193-1235, September.
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    9. Knez, Marc & Camerer, Colin, 2000. "Increasing Cooperation in Prisoner's Dilemmas by Establishing a Precedent of Efficiency in Coordination Games," Organizational Behavior and Human Decision Processes, Elsevier, vol. 82(2), pages 194-216, July.
    10. Simon, Herbert A. & Schaeffer, Jonathan, 1992. "The game of chess," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 1, pages 1-17 Elsevier.
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    Citations

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    Cited by:

    1. Tsuyoshi Hatori & Hayeong Jeong & Kiyoshi Kobayashi, 2014. "Regional learning and trust formation," Chapters,in: Knowledge, Innovation and Space, chapter 8, pages 180-212 Edward Elgar Publishing.
    2. Giovanna Devetag & Sibilla Guida & Luca Polonio, 2016. "An eye-tracking study of feature-based choice in one-shot games," Experimental Economics, Springer;Economic Science Association, vol. 19(1), pages 177-201, March.
    3. Giovanna Devetag & Andreas Ortmann, 2007. "When and why? A critical survey on coordination failure in the laboratory," Experimental Economics, Springer;Economic Science Association, vol. 10(3), pages 331-344, September.
    4. Andreas Nicklisch, 2006. "Perceiving strategic environments: An experimental study of learning under minimal information," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2006_17, Max Planck Institute for Research on Collective Goods.
    5. Rydval, Ondrej & Ortmann, Andreas & Ostatnicky, Michal, 2009. "Three very simple games and what it takes to solve them," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 589-601, October.
    6. Page, Lionel & Page, Katie, 2010. "Last shall be first: A field study of biases in sequential performance evaluation on the Idol series," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 186-198, February.
    7. Sibilla Di Guida & Giovanna Devetag, 2013. "Feature-Based Choice and Similarity Perception in Normal-Form Games: An Experimental Study," Games, MDPI, Open Access Journal, vol. 4(4), pages 1-19, December.
    8. Massimo Warglien, 2013. "Language and economic organization," Chapters,in: Handbook of Economic Organization, chapter 8 Edward Elgar Publishing.
    9. Giovanna Devetag & Sibilla Di Guida, 2010. "Feature-based Choice and Similarity in Normal-form Games: An Experimental Study," LEM Papers Series 2010/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    10. repec:gam:jgames:v:8:y:2017:i:3:p:33-:d:107453 is not listed on IDEAS
    11. Andreas Nicklisch, 2011. "Learning strategic environments: an experimental study of strategy formation and transfer," Theory and Decision, Springer, vol. 71(4), pages 539-558, October.
    12. Huck, Steffen & Jehiel, Philippe & Rutter, Tom, 2011. "Feedback spillover and analogy-based expectations: A multi-game experiment," Games and Economic Behavior, Elsevier, vol. 71(2), pages 351-365, March.
    13. Rodrigo Moro & Esteban Freidin & Fernando Tohmé, 2015. "Social preferences are not enough: Accounting for anomalous behavior in a complex mixed-motive game," Revista Cuadernos de Economía, Universidad Nacional de Colombia -FCE - CID, March.

    More about this item

    Keywords

    pure motive; mixed motive; preferences; bi-orders; language; cognition; projectivity; monotonicity; short term memory; experiments;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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