Magic Mirror on the Wall, Who Is the Smartest One of All?

Yoram Halevy, Johannes Hoelzemann and Terri Kneeland

Working Papers from University of Toronto, Department of Economics

Abstract: In the leading model of bounded rationality in games, each player best-responds to their belief that the other players reason to some finite level. This paper investigates a novel behavior that could reveal if the player’s belief lies outside the iterative reasoning model. This encompasses a situation where a player believes that their opponent can reason to a higher level than they do. We propose an identification strategy for such behavior, and evaluate it experimentally.

Keywords: Bounded rationality; higher-order rationality; level-k; cognitive-hierarchy; game theory; equilibrium; rationalizability; preference elicitation; lab experiment (search for similar items in EconPapers)
JEL-codes: C72 C92 D91 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2025-01-13
New Economics Papers: this item is included in nep-exp, nep-gth and nep-spo
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Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-789

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