Information and Beliefs in a Repeated Normal-Form Game

44 Pages Posted: 11 Aug 2008

See all articles by Dietmar Fehr

Dietmar Fehr

Heidelberg University - Alfred Weber Institute for Economics

Dorothea Kübler

Social Science Research Center (WZB); Technische Universität Berlin (TU Berlin) - Faculty of Economics and Management

David Nils Danz

affiliation not provided to SSRN

Multiple version iconThere are 3 versions of this paper

Abstract

We study beliefs and choices in a repeated normal-form game. In addition to a baseline treatment with common knowledge of the game structure and feedback about choices in the previous period, we run treatments (i) without feedback about previous play, (ii) with no information about the opponent's payoffs and (iii) with random matching. Using Stahl and Wilson's (1995) model of limited strategic reasoning, we classify behavior with regard to its strategic sophistication and consider its development over time. We use belief statements to check for the consistency of subjects' actions with the stated beliefs as well as for the accuracy of their beliefs (relative to the opponent's true choice). In the baseline treatment we observe more sophisticated play as well as more accurate beliefs and more best responses to beliefs over time. We isolate feedback as the main driving force of learning to play strategically and to form beliefs that accurately predict the behavior of the opponent.

Keywords: beliefs, experiments, strategic uncertainty, learning

JEL Classification: C72, C92, D84

Suggested Citation

Fehr, Dietmar and Kübler, Dorothea F. and Danz, David Nils, Information and Beliefs in a Repeated Normal-Form Game. IZA Discussion Paper No. 3627, Available at SSRN: https://ssrn.com/abstract=1214916 or http://dx.doi.org/10.2139/ssrn.1214916

Dietmar Fehr (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Dorothea F. Kübler

Social Science Research Center (WZB) ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany
40 30 25491440 (Phone)

HOME PAGE: http://www.wzb.eu/mp/vam/people/dorothea_kuebler.de.htm

Technische Universität Berlin (TU Berlin) - Faculty of Economics and Management ( email )

D-10623 Berlin
Germany
+49 30 31425263 (Phone)

HOME PAGE: http://www.wiwi-experimente.tu-berlin.de/

David Nils Danz

affiliation not provided to SSRN ( email )

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