A cognitive hierarchy model of behavior in the action commitment game

Details

Serval ID
serval:BIB_C953CEF4CD41
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
A cognitive hierarchy model of behavior in the action commitment game
Journal
International Journal of Game Theory
Author(s)
Carvalho D., Santos-Pinto L.
ISSN
0020-7276
Publication state
Published
Issued date
08/2014
Peer-reviewed
Oui
Volume
43
Number
3
Pages
551-577
Language
english
Abstract
We apply the cognitive hierarchy model of Camerer et al. (Q J Econ 119(3):861-898, 2004)-where players have different levels of reasoning-to Huck et al. (Games Econ Behav 38:240-264, 2002) discrete version of Hamilton and Slutsky (Games Econ Behav 2:29-46, 1990) action commitment game-a duopoly with endogenous timing of entry. We show that, for an empirically reasonable average number of thinking steps, the model rules out Stackelberg equilibria, generates Cournot outcomes including delay, and outcomes where the first mover commits to a quantity higher than Cournot but lower than Stackelberg leader. We show that a cognitive hierarchy model with quantal responses can explain the most important features of the experimental data on the action commitment game in (2002). In order to gauge the success of the model in fitting the data, we compare it to a noisy Nash model. We find that the cognitive hierarchy model with quantal responses fits the data better than the noisy Nash model.
Keywords
Action commitment game, Thinking steps, Cognitive hierarchy
Web of science
Create date
10/02/2014 12:05
Last modification date
20/08/2019 15:44
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