Beliefs and (In)Stability in Normal-Form Games

Kyle Hyndman, Antoine Terracol and Jonathan Vaksmann

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we use experimental data to study players' stability in normal-form games where subjects have to report beliefs and to choose actions. Subjects saw each of 12 games four times in a regular or isomorphic form spread over two days without feedback. We document a high degree of stability within the same (strategically equivalent) game, although time and changes in the presentation of the game do lead to less stability. To look at stability across different games, we adopt the level-k theory, and show that stability of both beliefs and actions is significantly lower. Finally, we estimate a structural model in which players either apply a consistent level of reasoning across strategically different games, or reasoning levels change from game to game. Our results show that approximately 30% of subjects apply a consistent level of reasoning across the 12 games, but that they assign a low level of sophistication to their opponent. The remaining 70% apply different levels of reasoning to different games.

Keywords: Game theory; Beliefs; Stability; Level-$k$ thinking (search for similar items in EconPapers)
JEL-codes: C72 C91 D83 (search for similar items in EconPapers)
Date: 2013-05-23
New Economics Papers: this item is included in nep-evo, nep-exp, nep-gth and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Beliefs and (in)stability in normal-form games (2022)
Working Paper: Beliefs and (in)stability in normal-form games (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:47221

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