Playing the Wrong Game: An Experimental Analysis of Relational Complexity and Strategic Misrepresentation

39 Pages Posted: 26 Sep 2005 Last revised: 11 Dec 2007

See all articles by Giovanna Devetag

Giovanna Devetag

Luiss Guido Carli

Massimo Warglien

University of Venice - Department of Business Economics & Management

Abstract

It has been suggested that players often produce simplified and/or misspecified mental representations of interactive decision problems (Kreps, 1990). We submit that the relational structure of players' preferences in a game induces cognitive complexity, and may be an important driver of such simplifications. We provide a formal classification of order structures in two-person normal form games based on the two properties of monotonicity and projectivity, and present experiments in which subjects must first construct a representation of games of different relational complexity, and subsequently play the games according to their own representation. Experimental results support the hypothesis that relational complexity matters. More complex games are harder to represent, and this difficulty is correlated with measures of short term memory capacity. Furthermore, most erroneous representations are less complex than the correct ones. In addition, subjects who misrepresent the games behave consistently with such representations according to simple but rational decision criteria. This suggests that in many strategic settings individuals may act optimally on the ground of simplified and mistaken premises.

Keywords: pure motive, mixed motive, preferences, bi-orders, language, cognition, projectivity, monotonicity, short term memory, experiments

JEL Classification: C70, C72, C91, D01

Suggested Citation

Devetag, Giovanna and Warglien, Massimo, Playing the Wrong Game: An Experimental Analysis of Relational Complexity and Strategic Misrepresentation. Games and Economic Behavior, Forthcoming, Available at SSRN: https://ssrn.com/abstract=806964 or http://dx.doi.org/10.2139/ssrn.806964

Giovanna Devetag (Contact Author)

Luiss Guido Carli ( email )

Via Salvini 2
Roma, 00197
Italy

Massimo Warglien

University of Venice - Department of Business Economics & Management ( email )

Dorsoduro 3246
Venezia VE 30121, Veneto 30123
Italy

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