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Cognition and Behavior in Two-Person Guessing Games: An Experimental Study

Costa-Gomes, M.A. and Crawford, V.P. (2006) Cognition and Behavior in Two-Person Guessing Games: An Experimental Study. American Economic Review, 96 (5). pp. 1737-1768. ISSN 0002-8282

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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.

Item Type: Article
Institution: The University of York
Academic Units: The University of York > Economics and Related Studies (York)
Depositing User: York RAE Import
Date Deposited: 13 Aug 2009 13:28
Last Modified: 13 Aug 2009 13:28
Published Version: http://dx.doi.org/10.1257/aer.96.5.1737
Status: Published
Publisher: American Economic Association
Identification Number: 10.1257/aer.96.5.1737
URI: http://eprints.whiterose.ac.uk/id/eprint/5538

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