Irrational Beliefs, Rational Actions: Understanding Subjects' Behavior in a Laboratory Experiment
30 Pages Posted: 7 Aug 2009 Last revised: 9 Sep 2009
Date Written: August 4, 2009
Rational choice models are commonly used in political science. However, many experimental results find humans do not behave as we would predict from simple rational choice models. In this paper we report on the result of experiments in which subjects both play a standard trust game and make predictions about other players in an experiment, thereby revealing information about how they expect others to behave in the experiment. We find that conditional on their beliefs, subjects play quite rationally in these games. The results suggest we need to understand individuals’ beliefs and knowledge when we model behavior in experimental and empirical settings.
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