Anchors of Strategic Reasoning in the Traveler's Dilemma

Hanh Tong () and David Freeman
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Hanh Tong: Theory+Practice

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: We experimentally study players' initial beliefs about non-strategic play that an- chors their strategic reasoning in the traveler's dilemma, a game in which each player chooses a number and has the incentive to undercut their opponent by the minimal amount possible. In a within-subject design, each subject repeatedly plays variations of the traveler's dilemma game without feedback. To identify their strategic reasoning, we vary the upper and lower bounds of the strategy space in each round, and also vary the reward/penalty for undercutting. We nd that players are both heterogeneous in the amount that they reason, and in their beliefs about non-strategic play. Notably, few players anchor their strategic reasoning on non-strategic uniform random play. We also nd ample evidence of non-strategic play. Our results caution against the common practice of assuming the same anchor of initial reasoning for all players when estimating players' depths of strategic reasoning.

Date: 2021-08
New Economics Papers: this item is included in nep-exp and nep-isf
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Journal Article: Anchors of strategic reasoning in the traveler’s dilemma (2021)
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