Reasoning about others' reasoning

Larbi Alaoui, Katharina A. Janezic and Antonio Penta ()

Journal of Economic Theory, 2020, vol. 189, issue C

Abstract: Recent experiments suggest that level-k behavior is often driven by subjects' beliefs, rather than their binding cognitive bounds. But the extent to which this is true in general is not completely understood, mainly because disentangling ‘cognitive’ and ‘behavioral’ levels is challenging experimentally and theoretically. In this paper we provide a simple experimental design strategy (the ‘tutorial method’) to disentangle the two concepts purely based on subjects' choices. We also provide a ‘replacement method’ to assess whether the increased sophistication observed when stakes are higher is due to an increase in subjects' own understanding or to their beliefs over others' increased incentives to reason.

Keywords: Cognitive bound; Depth of reasoning; Higher-order beliefs; Level-k reasoning; Replacement method; Tutorial method (search for similar items in EconPapers)
JEL-codes: C72 C92 D80 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Working Paper: Reasoning about Others' Reasoning (2017)
Working Paper: Reasoning about others’ reasoning (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:189:y:2020:i:c:s0022053120300855

DOI: 10.1016/j.jet.2020.105091

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