Anchored Strategic Reasoning

11 Pages Posted: 25 Jan 2022

See all articles by Radosveta Ivanova-Stenzel

Radosveta Ivanova-Stenzel

Technische Universität Berlin (TU Berlin)

Gyula Seres

National University of Singapore (NUS)

Abstract

Anchoring is a robust behavioral phenomenon modeled predominantly as a bias in individual judgment. We propose a game-theoretic model that considers players’ beliefs about others’ behavior as a mediator for the effect of the anchor on a player’s choice. The results establish that anchoring in strategic interactions reported in the literature can be rationalized by anchored beliefs about the opponents’ intentions. Notwithstanding, we also demonstrate that a player might adjust away from rather than toward the anchor in games where choices are strategic substitutes.

Keywords: Anchoring Bias, Auctions, Games, Incomplete Information, Strategy

Suggested Citation

Ivanova-Stenzel, Radosveta and Seres, Gyula, Anchored Strategic Reasoning. Available at SSRN: https://ssrn.com/abstract=4016960

Radosveta Ivanova-Stenzel (Contact Author)

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17. Juni 135
Berlin, 10623
Germany

Gyula Seres

National University of Singapore (NUS) ( email )

Singapore
Singapore

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