If I Don't Trust Your Preferences, I Won't Follow Mine: Preference Stability, Beliefs, and Strategic Choice
Irenaeus Wolff ()
No 113, TWI Research Paper Series from Thurgauer Wirtschaftsinstitut, UniversitÃ¤t Konstanz
In contrast to standard theory, experimental participants often do not best-respond to their stated beliefs. Potential reasons are inaccurate belief reports or unstable preferences. Focusing on games in which participants can observe the revealed preferences of their opponents, this paper points out an additional reason for the lack of belief-action consistency. Whether a participantâ€™s best-response---or a Nash-equilibrium---predicts her behaviour depends heavily on the participant believing in others' preference stability. Believing in others' preference stability fosters predictability because it is associated with a lower variance in the participant's belief about her opponents' actions, and low-variance beliefs entail more best-responding.
Keywords: Preference stability; best-response; Nash-equilibrium; rational beliefs; public good; social dilemma; conditional cooperation; social preferences. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth, nep-hpe and nep-neu
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Persistent link: https://EconPapers.repec.org/RePEc:twi:respas:0113
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