Beliefs and Endogenous Cognitive Levels: An Experimental Study
31 Pages Posted: 18 Apr 2012
Date Written: January 1, 2012
In this paper we use a laboratory setting to manipulate our subjects’ beliefs about the cognitive levels of the players they are playing against. We show that in the context of the 2/3 guessing game, individual choices crucially depend on their beliefs about the level of others. Hence, a subject’s true cognitive level may be different than the one he exhibits in a game with the difference being attributed to his expectations about the sophistication of the players he is playing against.
Keywords: Guessing Game, Beliefs, Level-k theory
JEL Classification: C72, C92, D83
Suggested Citation: Suggested Citation