【主讲】Ye (Wendy) Jin (NYU Shanghai)
【主题】What Determines Non-equilibrium Behavior in Games: Wrong Belief or Limited Ability?
【时间】2016年11月22日 (周二) 15：30-17：00
【地点】上海财经大学经济学院楼701室
【语言】英文
【摘要】Evidence from the literature suggests that people use very limited reasoning in games, which is usually far from the requirement to reach Nash equilibrium. I design an experiment to identify the decisive factor that prevents people from using more depth of reasoning: their incorrect belief of others' rationality or their limited reasoning ability. The experiment first classifies subjects into different Lk types by the reasoning steps they use in the games. It then distinguishes between the "Lkb" players, who have high ability and best respond to Lk belief, and the "Lka" players, who could use, at most, k steps of reasoning, and thus could not respond to L(k+1) or higher-order belief. The separation utilizes a combination of simultaneous and sequential ring games. In the sequential games it requires more than k reasoning steps to respond to Lk belief, so Lkb players still best respond but Lka would fail. I find that around half of the L2 and L3 subjects are best responding to L2 or L3 belief, while the rest have reached their upper boundaries of reasoning. Additionally, subjects' CRT scores, a measure of their cognitive ability, support the separation of the two types. The findings suggest that both belief and reasoning ability could be the decisive factors of players' observed levels.
