Beliefs and endogenous cognitive levels: An experimental study

Marina Agranov, Elizabeth Potamites, Andrew Schotter, Chloe Tergiman

    Research output: Contribution to journalArticle

    Abstract

    In this paper we use a laboratory setting to manipulate our subjects' beliefs about the cognitive levels of the players they are playing against. We show that in the context of the 2/3 guessing game, individual choices crucially depend on their beliefs about the level of others. Hence, a subject's true cognitive level may be different than the one he exhibits in a game with the difference being attributed to his expectations about the sophistication of the players he is playing against.

    Original languageEnglish (US)
    Pages (from-to)449-463
    Number of pages15
    JournalGames and Economic Behavior
    Volume75
    Issue number2
    DOIs
    StatePublished - Jul 1 2012

    Keywords

    • Beliefs
    • Guessing game
    • Level-k theory

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics

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