Rationalizing Irrational Beliefs

Geoffrey Dunbar, Juan Tu and Ruqu Wang

No 273503, Queen's Economics Department Working Papers from Queen's University - Department of Economics

Abstract: In this paper, we re-examine various previous experimental studies of the Centipede Game in the literature. These experiments found that players rarely follow the subgame-perfect equilibrium strategies of the game, and various modifications to the game were proposed to explain the outcomes of the experiments. We here offer yet another modification. Players have a choice of whether or not to believe that their opponents use subgame-perfect equilibrium strategies. We define a ‘behavioral equilibrium’ for this game. This equilibrium concept can reproduce the outcomes of those experiments.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 12
Date: 2006-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/273503/files/qed_wp_1033.pdf (application/pdf)

Related works:
Working Paper: Rationalizing Irrational Beliefs (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:quedwp:273503

DOI: 10.22004/ag.econ.273503

Access Statistics for this paper

More papers in Queen's Economics Department Working Papers from Queen's University - Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().