Higher-order Beliefs in a Sequential Social Dilemma

Evan Calford and Anujit Chakraborty

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: Do experimental subjects have consistent first and higher-order beliefs about other’s preferences? How does any inconsistency affect strategic decisions? We introduce a simple four-player sequential social dilemma where actions reveal first and higher-order beliefs. The unique sub game perfect Nash equilibrium (SPNE) is observed less than 5% of the time, even though our diagnostic treatments show that a majority of our subjects are self-interested, higher-order rational and have accurate first-order beliefs. In our data, strategic play vastly deviates from Nash predictions because first-order and higher-order beliefs are inconsistent for most subjects.

Keywords: Experimental economics; Higher-order beliefs; Social dilemma (search for similar items in EconPapers)
JEL-codes: C92 D81 D91 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-exp and nep-gth
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https://cbe.anu.edu.au/researchpapers/econ/wp681.pdf (application/pdf)

Related works:
Journal Article: Higher-order beliefs in a sequential social dilemma (2025)
Working Paper: Higher-order beliefs in a Sequential Social Dilemma (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2022-681

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