The Alpha-Beauty Contest: Choosing Numbers, Thinking Intervals
Enrico G. De Giorgi
University of St. Gallen - SEPS: Economics and Political Sciences
University of Zurich - Department of Economics
June 8, 2007
We present a model for the alpha-beauty contest that explains common patterns in experimental data of one-shot and iterative games. The approach is based on two basic assumptions. First, players iteratively update their recent guesses. Second, players estimate intervals rather than exact numbers to cope with incomplete knowledge of other players' choices. Under these assumptions we extend the cognitive hierarchy model of Camerer, Ho, and Chong (2003). The extended model is estimated on experimental data from a newspaper experiment.
Number of Pages in PDF File: 35
Keywords: Experiments, alpha-beauty contest, beliefs
JEL Classification: C91, D84
Date posted: March 4, 2004
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