Indirect higher order beliefs and cooperation

Jiabin Wu ()

Experimental Economics, 2018, vol. 21, issue 4, No 7, 858-876

Abstract: Abstract This study experimentally examines the role of indirect higher order beliefs in sequential psychological games. We consider a three-player sequential game in which the first and third players do not interact sequentially, but only through an intermediary, the second player. We posit that the third player’s decision to cooperate depends on his indirect higher order belief, namely, his belief about what the first player believes the second player would choose. We employ pre-play communication between the first and third players as a way to influence the third player’s indirect higher order belief. The evidence demonstrates that communication can effectively induce cooperation from the third player by shaping his indirect higher order belief.

Keywords: Indirect higher order beliefs; Psychological game theory; Sequential reciprocity; Communication; Behavioral economics; Experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C91 D03 D83 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Working Paper: Indirect Higher Order Beliefs and Cooperation (2016)
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DOI: 10.1007/s10683-017-9555-y

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