Do people minimize regret in strategic situations? A level-k comparison

Regret minimization and level-k reasoning have been proposed as alternative models for rationalizing non-equilibrium behavior in games. We provide a theoretical and experimental analysis of the relationship between these two models, a relationship that has been neglected by economists. Both theories predict the same behavior in a surprisingly large number of experimentally tested games. We identify conditions under which this happens and use them to design a series of games to separate minimax regret from level-1. The experimental test of these games and data from Costa-Gomes and Crawford (2006) reveal that no one systematically minimizes regret, casting doubt on minimax regret as a relevant explanation for behavior in strategic situations.