Ignoring the Rationality of Others: Evidence from Experimental Normal-Form Games

39 Pages Posted: 21 Aug 2001

See all articles by Georg Weizsacker

Georg Weizsacker

Humboldt University Berlin; DIW Berlin

Date Written: May 23, 2001

Abstract

In this paper, two models of two-person normal-form game play behavior are presented and estimated, using three experimental data sets. The models are variants of the Quantal Response Equilibrium model defined by McKelvey and Palfrey (1995, "Games and Economic Behavior"), and allow a player to hold inaccurate beliefs about the behavior of her opponent. Each model involves two parameters: One captures the player's own level of response rationality, the other the level she attributes to her opponent. In order to allow for type heterogeneity among the subjects in the experiments, parametric distributions of these parameters are assumed. The estimation results indicate that in all three data sets the subjects' choices follow a specific anomalous pattern: On average, subjects play as if they significantly underestimated their opponent's rationality.

Keywords: beliefs, prediction accuracy, experiments, quantal response equilibrium

JEL Classification: C23, C91

Suggested Citation

Weizsacker, Georg, Ignoring the Rationality of Others: Evidence from Experimental Normal-Form Games (May 23, 2001). Available at SSRN: https://ssrn.com/abstract=277669 or http://dx.doi.org/10.2139/ssrn.277669

Georg Weizsacker (Contact Author)

Humboldt University Berlin ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

DIW Berlin

Mohrenstr. 58
Berlin
Germany

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