Information and Beliefs in a Repeated Normal-Form Game

49 Pages Posted: 15 Apr 2010

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 Danz

University of Pittsburgh - Department of Economics; affiliation not provided to SSRN

Multiple version iconThere are 3 versions of this paper

Date Written: March 12, 2010

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, feedback about choices in the previous period and random matching, we run treatments (i) with fixed matching, (ii) without information about the opponent’s payoffs, and (iii) without feedback about previous play. 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. In the treatments with feedback and full information about the game, we observe more strategic play, more best-responses to beliefs and more accurate beliefs over time. While feedback is the main driving force of learning to play strategically and for forming beliefs that accurately predict the behavior of the opponent, both incomplete information about the opponent’s payoffs or lack of feedback lead to a stagnation of best-response rates over time.

Keywords: Experiments, Beliefs, Strategic Uncertainty, Learning

JEL Classification: C72, C92, D84

Suggested Citation

Fehr, Dietmar and Kübler, Dorothea F. and Danz, David N, Information and Beliefs in a Repeated Normal-Form Game (March 12, 2010). Available at SSRN: https://ssrn.com/abstract=1587935 or http://dx.doi.org/10.2139/ssrn.1587935

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 N Danz

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States

affiliation not provided to SSRN

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