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Indirect Higher Order Beliefs and Cooperation

Jiabin Wu ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper experimentally examines why communication may matter for inducing cooperation in strategic interactions involving intermediaries. We consider a three-player centipede game in which the first and the third players do not interact sequentially, but only through the second player. We posit that the third player's decision to cooperate depends on his indirect higher order belief, that is, his belief about what the first player believes the second player would choose. The evidence demonstrates that communication between the first and the third player can effectively induce cooperation from the third player through shaping his indirect higher order belief.

Keywords: indirect higher order beliefs; communication; psychological game theory; guilt aversion; sequential reciprocity; social preferences; behavioral economics; experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C9 C91 D03 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
Date: 2016-02-18
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https://mpra.ub.uni-muenchen.de/69600/1/MPRA_paper_69600.pdf original version (application/pdf)

Related works:
Journal Article: Indirect higher order beliefs and cooperation (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69600

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