Experimental Evidence on Iterated Reasoning in Games

PLoS One. 2015 Aug 27;10(8):e0136524. doi: 10.1371/journal.pone.0136524. eCollection 2015.

Abstract

We present experimental evidence on two forms of iterated reasoning in games, i.e. backward induction and interactive knowledge. Besides reliable estimates of the cognitive skills of the subjects, our design allows us to disentangle two possible explanations for the observed limits in performed iterated reasoning: Restrictions in subjects' cognitive abilities and their beliefs concerning the rationality of co-players. In comparison to previous literature, our estimates regarding subjects' skills in iterated reasoning are quite pessimistic. Also, we find that beliefs concerning the rationality of co-players are completely irrelevant in explaining the observed limited amount of iterated reasoning in the dirty faces game. In addition, it is demonstrated that skills in backward induction are a solid predictor for skills in iterated knowledge, which points to some generalized ability of the subjects in iterated reasoning.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Female
  • Games, Experimental*
  • Humans
  • Male
  • Simulation Training*

Grant support

This work was supported by Deutsche Forschungsgemeinschaft, grant number: TU 409/1-1, receiver of the funding: Andreas Tutic, website: http://www.dfg.de. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript. We acknowledge support from the German Research Foundation (DFG) and Universität Leipzig within the program of Open Access Publishing.