Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
Cognitive Hierarchies in the Minimizer Game
(), Hannelore De Silva
() and Gerlinde Fellner-Röhling
Abstract: Experimental tests of choice predictions in one-shot games
show only little support for Nash equilibrium (NE). Poisson Cognitive
Hierarchy (PCH) and level-k (LK) are behavioral models of the
thinking-steps variety where subjects differ in the number of levels of
iterated reasoning they perform. Camerer et al. (2004) claim that
substituting the Poisson parameter tau = 1.5 yields a parameter-free PCH
model (pfPCH) which predicts experimental data considerably better than NE.
We design a new multi-person game, the Minimizer Game, as a testbed to
compare initial choice predictions of NE, pfPCH and LK. Data obtained from
two large-scale online experiments strongly reject NE and LK, but are well
in line with the point prediction of pfPCH.
Keywords: behavioral game theory, experimental games, Poisson cognitive hierarchy, level-k model, minimizer game; (follow links to similar papers)
JEL-Codes: C72,; C90,; D01,; D83; (follow links to similar papers)
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