Heuristic Centered-Belief Players

Irenaeus Wolff

No 128, TWI Research Paper Series from Thurgauer Wirtschaftsinstitut, Universität Konstanz

Abstract: Strategic behavior oft‰en diverges from Nash-equilibrium, in particular in unexperienced play. I provide data from a class of simple discoordination games and show that none of the popular models of behavioural game theory predicts the predominant aggregate choice patt‹ern. And yet, Noisy Introspection (Goeree and Holt, 2004) readily accounts for about half of the individual observations. Th‘e reason for the apparent paradox and the mismatch of the aggregate data and the models is a disregarded behavioural type that makes up about 25% of the population. Th‘ese 25% hold beliefs that peak in the centre of the option set and that are roughly symmetric. In addition, the players show a more heuristic process translating their belief into actions, as their choices cannot be explained readily by quantal responding. Th‘e behavioural patt‹ern of a ‘centered belief’ in connection with boundedly-rational decision-making is present also in another prominent game from the literature on behavioural game theory, the 11–20 game. Finally, I show that classifying players as ‘heuristic centered-belief types’ by one game’s beliefs has predictive power for behaviour in the other game.

Keywords: Nash-equilibrium; quantal-response equilibrium; level-k; cognitive hierarchy; salience theory; noisy introspection; central-tendency bias. (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-evo, nep-exp, nep-gth and nep-upt
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