American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Cognition and Behavior in Two-Person Guessing Games: An Experimental Study
American Economic Review
vol. 96,
no. 5, December 2006
(pp. 1737–1768)
Abstract
This paper reports an experiment that elicits subjects initial responses to 16 dominance-solvable two-person guessing games. The structure is publicly announced except for varying payoff parameters, to which subjects are given free access. Varying the parameters allows very strong separation of the behavior implied by leading decision rules. Subjects decisions and searches show that most subjects understood the games and sought to maximize payoffs, but many had simplified models of others decisions that led to systematic deviations from equilibrium. The predictable component of their deviations is well explained by a structural nonequilibrium model of initial responses based on level-k thinking. (JEL C72, C92, D83)Citation
Costa-Gomes, Miguel, A., and Vincent P. Crawford. 2006. "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study." American Economic Review, 96 (5): 1737–1768. DOI: 10.1257/aer.96.5.1737Additional Materials
JEL Classification
- C72 Noncooperative Games
- C92 Design of Experiments: Laboratory, Group Behavior
- D83 Search; Learning; Information and Knowledge; Communication; Belief