Naivete and Sophistication in Initial and Repeated Play in Games

Nagore Iriberri and García-Pola, Bernardo

No 14088, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Naive, non-equilibrium, behavioral rules, compared to more sophisticated equilibrium theory, are often better in describing individuals' initial play in games. Additionally, in repeated play in games, when individuals have the oppor- tunity to learn about their opponents' past behavior, learning models of different sophistication levels are successful in explaining how individuals modify their be- havior in response to feedback. How do subjects following different behavioral rules in initial play modify their behavior after learning about past behavior? This study links both initial and repeated play in games, analyzing elicited be- havior in 3x3 normal-form games using a within-subject laboratory design. We classify individuals into different behavioral rules in both initial and repeated play and test whether and/or how naivete and sophistication in initial play cor- relates with naivete and sophistication in repeated play. We find no evidence for a correlation between naivete and sophistication in initial and repeated play.

Keywords: Naivete; Sophistication; Initial play; Repeated play; Level-k thinking; Adaptive and sophisticated learning; Mixture-of-types estimation (search for similar items in EconPapers)
JEL-codes: C70 C91 C92 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-exp and nep-gth
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