Incentives and Strategic Behaviour: An Experiment

Teresa Esteban-Casanelles and Duarte Gon\c{c}alves
Authors registered in the RePEc Author Service: Duarte Gonçalves

Papers from arXiv.org

Abstract: How and why do incentive levels affect strategic behaviour? This paper examines an experiment designed to identify the causal effect of scaling up incentives on choices, beliefs, and response times in dominance-solvable games. Higher incentives increase action sophistication and decrease mistake propensity, while beliefs become more accurate, and response times longer. We provide evidence that higher incentives increase cognitive effort, as proxied by longer response times, which in turn is associated with improved performance and predicts choice sophistication and belief accuracy. Overall, the data lend support to both payoff-dependent mistakes and costly reasoning models.

Date: 2023-04, Revised 2025-02
New Economics Papers: this item is included in nep-exp, nep-gth, nep-mac and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2304.00412 Latest version (application/pdf)

Related works:
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:arx:papers:2304.00412

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().