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Using Response Times to Measure Strategic Complexity and the Value of Thinking in Games

22 Pages Posted: 5 Feb 2017  

David Gill

Purdue University, Department of Economics

Victoria L. Prowse

Purdue University - Department of Economics; IZA Institute of Labor Economics; German Institute for Economic Research (DIW Berlin)

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Abstract

Response times are a simple low-cost indicator of the process of reasoning in strategic games (Rubinstein, 2007; Rubinstein, 2016). We leverage the dynamic nature of response-time data from repeated strategic interactions to measure the strategic complexity of a situation by how long people think on average when they face that situation (where we define situations according to the characteristics of play in the previous round). We find that strategic complexity varies significantly across situations, and we find considerable heterogeneity in how responsive subjects' thinking times are to complexity. We also study how variation in response times at the individual level across rounds affects strategic behavior and success. We find that 'overthinking' is detrimental to performance: when a subject thinks for longer than she would normally do in a particular situation, she wins less frequently and earns less. The behavioral mechanism that drives the reduction in performance is a tendency to move away from Nash equilibrium behavior.

Keywords: response time, decision time, thinking time, strategic complexity, game theory, strategic games, repeated games, beauty contest, cognitive ability, personality

JEL Classification: C72, C91

Suggested Citation

Gill, David and Prowse, Victoria L., Using Response Times to Measure Strategic Complexity and the Value of Thinking in Games. IZA Discussion Paper No. 10518. Available at SSRN: https://ssrn.com/abstract=2911456

David Gill (Contact Author)

Purdue University, Department of Economics ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

Victoria L. Prowse

Purdue University - Department of Economics ( email )

West Lafayette, IN 47907-1310
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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