Self-selection with non-equilibrium beliefs: Predicting behavior in a tournament experiment

Tobias Brünner

Journal of Economic Behavior & Organization, 2020, vol. 169, issue C, 389-396

Abstract: In this study we use level-k thinking and a recently proposed model of non-equilibrium beliefs in dynamic games (PBNLK) to predict behavior in a tournament with self-selection. We find that the combination of level-k and PBNLK predicts both the population of types in the tournament, as well as the mean and variance of efforts better than Nash equilibrium, a static level-k model and other models of non-equilibrium beliefs. Our results show that non-equilibrium beliefs are an important determinant for the decision to compete in a tournament and the performance in that tournament. Moreover, a useful model of non-equilibrium beliefs should allow players to update their beliefs during the course of the competition.

Keywords: Level-k thinking; NLK; Bayesian updating; Tournament; Experiment; Competition (search for similar items in EconPapers)
JEL-codes: C72 C92 D02 M52 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:169:y:2020:i:c:p:389-396

DOI: 10.1016/j.jebo.2019.11.028

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