Anchored Strategic Reasoning

Radosveta Ivanova-Stenzel and Gyula Seres
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Radosveta Ivanova-Stenzel: TU Berlin

No 314, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Anchoring is a robust behavioral phenomenon modeled predominantly as a bias in individual judgment. We propose a game-theoretic model that considers players’ beliefs about others’ behavior as a mediator for the effect of the anchor on a player’s choice. The results establish that anchoring in strategic interactions reported in the literature can be rationalized by anchored beliefs about the opponents’ intentions. Notwithstanding, we also demonstrate that a player might adjust away from rather than toward the anchor in games where choices are strategic substitutes.

Keywords: anchoring bias; auctions; games; incomplete information; strategy (search for similar items in EconPapers)
JEL-codes: C72 D01 D91 (search for similar items in EconPapers)
Date: 2022-01-25
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-neu
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Citations: View citations in EconPapers (1)

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