Strategic reasoning in p-beauty contests

Yves Breitmoser ()

Games and Economic Behavior, 2012, vol. 75, issue 2, 555-569

Abstract: This paper analyzes strategic choice in p-beauty contests. First, I show that it is not generally a best reply to guess the expected target value, even in games with n>2 players, and that iterated best response strictly applied does not induce a choice sequence approximating pk⋅0.5. Second, I argue that the beliefs and actions of players typically considered to be level 2–4 are intuitively captured also by high-level concepts such as quantal response equilibrium and noisy introspection. Third, I analyze this hypothesis econometrically. The results concur. In six different data sets, the choices are described more adequately as mixtures of quantal response equilibrium and noisy introspection than as level-k mixtures.

Keywords: Beauty contest; Logit equilibrium; Noisy introspection; Level-k (search for similar items in EconPapers)
JEL-codes: C44 C72 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:75:y:2012:i:2:p:555-569

DOI: 10.1016/j.geb.2012.02.010

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