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Higher orders of rationality and the structure of games

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Abstract

Identifying higher orders of rationality is crucial to the understanding of strategic behavior. Nonetheless, the identification of a subject's actual order of rationality from observed behavior in games remains highly elusive. Games may significantly impact and hence invalidate the identified order. To tackle this fundamental problem, we introduce an axiomatic approach that singles out a new class of games, the e-ring games. We then present results from a within subject experiment comparing individuals' classification across e-ring games and standard games previously used in the literature. The results show that satisfying the axioms introduced significantly reduces errors and contributes towards a more reliable identification.
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  • Francesco Cerigioni & Fabrizio Germano & Pedro Rey-Biel & Peio Zuazo-Garin, 2019. "Higher orders of rationality and the structure of games," Economics Working Papers 1672, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:1672
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    Cited by:

    1. Wei James Chen & Meng-Jhang Fong & Po-Hsuan Lin, 2023. "Measuring Higher-Order Rationality with Belief Control," Papers 2309.07427, arXiv.org.

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    More about this item

    Keywords

    Rationality; higher-order rationality; revealed rationality; levels of thinking.;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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