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Cognitive Hierarchies in the Minimizer Game

Author

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  • Ulrich Berger

    () (Department of Economics, Vienna University of Economics and Business)

  • Hannelore De Silva

    () (Department Finance, Accounting and Statistics , Vienna University of Economics and Business)

  • Gerlinde Fellner-Röhling

    () (Institute of Economics, Ulm University)

Abstract

Experimental tests of choice predictions in one-shot games show only little support for Nash equilibrium (NE). Poisson Cognitive Hierarchy (PCH) and level-k (LK) are behavioral models of the thinking-steps variety where subjects differ in the number of levels of iterated reasoning they perform. Camerer et al. (2004) claim that substituting the Poisson parameter tau = 1.5 yields a parameter-free PCH model (pfPCH) which predicts experimental data considerably better than NE. We design a new multi-person game, the Minimizer Game, as a testbed to compare initial choice predictions of NE, pfPCH and LK. Data obtained from two large-scale online experiments strongly reject NE and LK, but are well in line with the point prediction of pfPCH.

Suggested Citation

  • Ulrich Berger & Hannelore De Silva & Gerlinde Fellner-Röhling, 2016. "Cognitive Hierarchies in the Minimizer Game," Department of Economics Working Papers wuwp211, Vienna University of Economics and Business, Department of Economics.
  • Handle: RePEc:wiw:wiwwuw:wuwp211
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    More about this item

    Keywords

    behavioral game theory; experimental games; Poisson cognitive hierarchy; level-k model; minimizer game;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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