Cognition and Behavior in Two-Person Guessing Games: An Experimental Study
Costa-Gomes, Miguel A., and
Vincent P. Crawford. 2006. "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study."
American Economic Review,
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)
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Costa-Gomes, Miguel A.
Crawford, Vincent P.