Off-Path Beliefs

Duarte Gonçalves, Terri Kneeland and Andreas G. B. Ziegler
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Duarte Gonçalves: University College London
Terri Kneeland: University of Calgary
Andreas G. B. Ziegler: Vrije Universiteit Amsterdam

No 26-062/I, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: The off path plays a key role in theoretical models of strategic interaction, yet, empirically, little is known about choices and beliefs off path. Using a novel experimental paradigm where off-path behaviour is well identified and mistakes are rare, we document three findings. First, participants overestimate mistake probabilities and overreact to payoff differences. Second, although off-path moves strongly predict subsequent deviations, participants underinfer from them when forming beliefs about later choices. Third, underinference is strongest among participants assigning low probability to off-path moves. They are perfection believers: following an off-path move, they continue ruling out subsequent deviations.

JEL-codes: C72 C92 D83 D91 (search for similar items in EconPapers)
Date: 2026-08-28, Revised 2026-09-03
New Economics Papers: this item is included in nep-exp
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