Off-Path Beliefs

Gonçalves, Duarte, Terri Kneeland and Andreas G. B. Ziegler

No 21905, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The off path plays a key role in theoretical models of strategic interaction, yet, empirically, little is known about choices and beliefs off path. Using a novel experimental paradigm where off-path behaviour is well identified and mistakes are rare, we document three findings. First, participants overestimate mistake probabilities and overreact to payoff differences. Second, although off-path moves strongly predict subsequent deviations, participants underinfer from them when forming beliefs about later choices. Third, underinference is strongest among participants assigning low probability to off-path moves. They are perfection believers: following an off-path move, they continue ruling out subsequent deviations.

Keywords: Game theory; Belief formation; Sequential rationality; Incentives; Costly Cognition (search for similar items in EconPapers)
JEL-codes: C72 C92 D83 D84 (search for similar items in EconPapers)
Date: 2026-09
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Working Paper: Off-Path Beliefs (2026)
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