Consistent depth of reasoning in level-k models

Cooper, David J., Fatas, Enrique, Morales, Antonio J. and Qi, Shi (2024) Consistent depth of reasoning in level-k models. American Economic Journal: Microeconomics, 16 (4). pp. 40-61. ISSN 1945-7669

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Abstract

Level-k models often assume that individuals employ a  xed depth of reasoning across di erent games. We study this assumption by having subjects make choices in  ve classes of games chosen to identify inconsistent depth of reasoning. We demonstrate that depth of reasoning is pervasively inconsistent, changing both within and between classes of games. We show that this cannot easily be explained by factors such as subject confusion, changing beliefs about others' depth of reasoning, stochastic choice, model misspecification, changing incentives, or low cognitive ability. We develop a simple model incorporating ambiguity aversion that predicts inconsistent depth of reasoning.

Item Type:	Article
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Behavioural Economics Faculty of Social Sciences > Research Centres > Centre for Behavioural and Experimental Social Sciences
Related URLs:	https://www.aeaweb.org/articles?id=10.12...
Depositing User:	LivePure Connector
Date Deposited:	11 Sep 2023 10:30
Last Modified:	19 Dec 2024 01:10
URI:	https://ueaeprints.uea.ac.uk/id/eprint/93018
DOI:	10.1257/mic.20210237

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