Non-equilibrium play in centipede games

Bernardo García-Pola, Nagore Iriberri and Jaromír Kovářík

Games and Economic Behavior, 2020, vol. 120, issue C, 391-433

Abstract: Centipede games represent a classic example of a strategic situation, where the equilibrium prediction is at odds with human behavior. This study is explicitly designed to discriminate among the proposed explanations for initial responses in centipede games. Using many different centipede games, our approach determines endogenously whether one or more explanations are empirically relevant. We find that non-equilibrium behavior is too heterogeneous to be explained by a single model. However, most non-equilibrium choices can be fully explained by level-k thinking and quantal response equilibrium but each model for different subjects. Preference-based models play a negligible role in explaining non-equilibrium play.

Keywords: Centipede games; Bounded rationality; Common knowledge of rationality; Quantal response equilibrium; Level-k model; Experiments; Mixture-of-types models (search for similar items in EconPapers)
JEL-codes: C72 C92 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Working Paper: Non-equilibrium Play in Centipede Games (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:120:y:2020:i:c:p:391-433

DOI: 10.1016/j.geb.2020.01.007

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