Salience and Strategy Choice in 2 × 2 Games

Jonathan Leland and Mark Schneider
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Mark Schneider: Economic Science Institute, Chapman University, One University Drive, Orange, CA 92866, USA
Authors registered in the RePEc Author Service: Mark Schneider and Mark Schneider

Games, 2015, vol. 6, issue 4, 1-39

Abstract: We present a model of boundedly rational play in single-shot 2 × 2 games. Players choose strategies based on the perceived salience of their own payoffs and, if own-payoff salience is uninformative, on the perceived salience of their opponent’s payoffs. When own payoffs are salient, the model’s predictions correspond to those of Level-1 players in a cognitive hierarchy model. When it is the other player’s payoffs that are salient, the predictions of the model correspond to those of traditional game theory. The model provides unique predictions for the entire class of 2 × 2 games. It identifies games where a Nash equilibrium will always occur, ones where it will never occur, and ones where it will occur only for certain payoff values. It also predicts the outcome of games for which there are no pure Nash equilibria. Experimental results supporting these predictions are presented.

Keywords: behavioral game theory; bounded rationality; salience; heuristics (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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