Anchors of strategic reasoning in the traveler’s dilemma

Hanh T. Tong and David Freeman

Journal of Economic Behavior & Organization, 2021, vol. 191, issue C, 28-38

Abstract: We experimentally study players’ initial beliefs about non-strategic play that anchors their strategic reasoning in the traveler’ s dilemma, a game in which each player chooses a number and has the incentive to undercut their opponent by the minimal amount possible. In a within-subject design, each subject repeatedly plays variations of the traveler’ s dilemma game without feedback. To identify their strategic reasoning, we vary the upper and lower bounds of the strategy space in each round, and also vary the reward/penalty for undercutting. We find that players are both heterogeneous in the amount that they reason, and in their beliefs about non-strategic play. Notably, few players anchor their strategic reasoning on non-strategic uniform random play. We also find ample evidence of non-strategic play. Our results caution against the common practice of assuming the same anchor of initial reasoning for all players when estimating players’ depths of strategic reasoning.

Keywords: Level-k; Strategic reasoning in games; Anchors of strategic reasoning (search for similar items in EconPapers)
Date: 2021
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Working Paper: Anchors of Strategic Reasoning in the Traveler's Dilemma (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:191:y:2021:i:c:p:28-38

DOI: 10.1016/j.jebo.2021.08.026

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