Three Very Simple Games and What it Takes to Solve Them

Abstract

We study experimentally the nature of dominance violations in three minimalist dominancesolvable guessing games. Only about a third of our subjects report reasoning consistent with dominance; they all make dominant choices and almost all expect others to do so. Nearly two-thirds of subjects report reasoning inconsistent with dominance, yet a quarter of them actually make dominant choices and half of those expect others to do so. Reasoning errors are more likely for subjects with lower working memory, intrinsic motivation and premeditation attitude. Dominance-incompatible reasoning arises mainly from subjects misrepresenting the strategic nature (payoff structure) of the guessing games. AbstractWe study experimentally the nature of dominance violations in three minimalist dominancesolvable guessing games. Only about a third of our subjects report reasoning consistent with dominance; they all make dominant choices and almost all expect others to do so. Nearly twothirds of subjects report reasoning inconsistent with dominance, yet a quarter of them actually make dominant choices and half of those expect others to do so. Reasoning errors are more likely for subjects with lower working memory, intrinsic motivation and premeditation attitude. Dominance-incompatible reasoning arises mainly from subjects misrepresenting the strategic nature (payoff structure) of the guessing games. Table 4 116 8 1 1 0 3 3 Choice=1 & Belief=0 3 3 0 0 0 0 0 Choice=1 & Belief=1 47 4 6 1 0 0 0 0 Three Very Simple Games and What It Takes to Solve Them AbstractWe study experimentally the nature of dominance violations in three minimalist dominancesolvable guessing games. Only about a third of our subjects report reasoning consistent with dominance; they all make dominant choices and almost all expect others to do so. Nearly twothirds of subjects report reasoning inconsistent with dominance, yet a quarter of them actually make dominant choices and half of those expect others to do so. Reasoning errors are more likely for subjects with lower working memory, intrinsic motivation and premeditation attitude. Dominance-incompatible reasoning arises mainly from subjects misrepresenting the strategic nature (payoff structure) of the guessing games.

Social preferences and cognitive reflection: evidence from a dictator game experiment

“…Researchers have made substantial improvements in understanding the relationship between various measures of cognitive ability and economic behavior in different domains. In this respect, measures of cognitive ability have been shown to determine the degree of strategic sophistication (e.g., Rydval et al, 2009 ; Brañas-Garza et al, 2012 ; Carpenter et al, 2013 ) and appear to correlate with risk and time preferences (Frederick, 2005 ; Brañas-Garza et al, 2008 ; Burks et al, 2009 ; Dohmen et al, 2010 ; Andersson et al, 2013 ; Benjamin et al, 2013 ), as well as with heuristics and well-known behavioral biases in financial decisions, such as overconfidence, anchoring or the so-called conjunction fallacy (Oechssler et al, 2009 ; Bergman et al, 2010 ; Hoppe and Kusterer, 2011 ; Toplak et al, 2011 ).…”

Misconceptions and Game Form Recognition: Challenges to Theories of Revealed Preference and Framing

“…Tversky and Kahneman ð1986Þ use an optical illusion to suggest that, by analogy to principles governing vision, preferences are subject to context. FIG.14 Failures of game form recognition have been documented elsewhere in the literature and are known to be a source of anomalies in experimental workðChou et al 2009;Rydval, …”

Pro-sociality and strategic reasoning in economic decisions

“…Some experiments studied other dimensions of strategic reasoning: making few reasoning errors in a beauty contest game appears positively related to the performance on the Operation Span test (Rydval et al, 2009 ). Instead, Georganas et al ( 2014 ) report no significant relationship between level-k playing and scores in various cognitive tests: IQ, Eye Gaze test for adult autism, Wechsler digit span working memory test, and Cognitive Reflection Test.…”