Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 430: Strategic Sophistication of Individuals and Teams in Experimental Normal-Form Games
Matthias Sutter (), Simon Czermak and Francesco Feri
Additional contact information
Matthias Sutter: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG
Simon Czermak: Department of Public Finance, University of Innsbruck
Francesco Feri: Department of Public Finance, University of Innsbruck
Abstract: We present an experiment on strategic thinking and behavior of individuals and teams in oneshot normal-form games. Besides making choices, decision makers have to state their firstand second-order beliefs. We find that teams play the Nash strategy significantly more often, and their choices are more often consistent by being a best reply to first order beliefs. We identify the complexity of a game and the payoffs in equilibrium as determining the likelihood of consistent behavior according to textbook rationality. Using a mixture model, the estimated probability to play strategically is 62% for teams, but only 40% for individuals.
Keywords: Strategic sophistication; beliefs; experiment; team decision making; individual decision making
56 pages, February 1, 2010
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