The Alpha-Beauty Contest: Choosing Numbers, Thinking Intervals

De Giorgi, Enrico G.; Reimann, Stefan

doi:10.2139/ssrn.512242

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The Alpha-Beauty Contest: Choosing Numbers, Thinking Intervals

35 Pages Posted: 4 Mar 2004

See all articles by Enrico G. De Giorgi

Enrico G. De Giorgi

University of St. Gallen - SEPS: Economics and Political Sciences; Swiss Finance Institute

Stefan Reimann

University of Zurich - Department of Economics

Date Written: June 8, 2007

Abstract

We present a model for the alpha-beauty contest that explains common patterns in experimental data of one-shot and iterative games. The approach is based on two basic assumptions. First, players iteratively update their recent guesses. Second, players estimate intervals rather than exact numbers to cope with incomplete knowledge of other players' choices. Under these assumptions we extend the cognitive hierarchy model of Camerer, Ho, and Chong (2003). The extended model is estimated on experimental data from a newspaper experiment.

Keywords: Experiments, alpha-beauty contest, beliefs

JEL Classification: C91, D84

Suggested Citation: Suggested Citation

De Giorgi, Enrico G. and Reimann, Stefan, The Alpha-Beauty Contest: Choosing Numbers, Thinking Intervals (June 8, 2007). Available at SSRN: https://ssrn.com/abstract=512242 or http://dx.doi.org/10.2139/ssrn.512242