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We investigate our capacity to attribute preferences to others. This ability is intrinsic to game theory, and is a central component of “Theory of Mind”, perhaps the capstone of social cognition. This component of theory of mind allows individuals to learn more rapidly in strategic environments with an element of novelty. We show that the capacity to attribute preferences yields an advantage over less sophisticated approaches to strategic interaction (e.g. reinforcement learning) because it allows agents to extrapolate to novel circumstances information about counterparts' preferences that was learned previously. We report experiments investigating this capacity in extensive form games. We find significant learning of others' preferences, providing evidence for the presence and effectiveness of this aspect of theory of mind. Moreover, scores on survey measures of autism-spectrum tendencies are significant determinants of individual learning, so our notion of theory of mind is related to the notion as understood in psychology. [ABSTRACT FROM AUTHOR]

We report an experimental test of alternative rules in innovation contests when success may not be feasible and contestants may learn from each other. Following Halac, Kartik, and Liu (in press), the contest designer can vary the prize allocation rule from Winner-Take-All (WTA) in which the first successful innovator receives the entire prize to Shared in which all successful innovators during the contest duration share in the prize. The designer can also vary the information disclosure policy from Public in which at each period, all information about contestants' past successes and failures is publicly available, to Private, in which contestants only know their own histories. In our setting, the optimal contest design in terms of maximizing the probability that at least one innovator is successful depends on the probability of successful innovation, given that innovation is feasible. Under some parameters the designer will prefer a WTA-Public contest; while, under others he will prefer Shared-Private. Our experiments provide evidence that Private disclosure contests behaviorally dominate Public disclosure, regardless of the prize allocation rule, and moreover that Shared-Private contests dominate WTA-Private contests. [ABSTRACT FROM AUTHOR]

Tournaments consisting of iterative matches are a common mechanism for determining how to allocate a prize. For this reason it is important to understand the behavioral as well as the theoretical properties of different tournament structures. Given that laboratory experiments have consistently found high levels of overbidding in contests, one might suspect that double-elimination tournaments would generate substantially more total investment than single-elimination tournaments despite the two types of tournaments generating theoretically equivalent expected aggregate investment. This paper reports a set of laboratory experiments designed to test this comparison. The results indicate that aggregate investment is similar between the two tournaments, despite behavioral differences in bidding strategies. [ABSTRACT FROM AUTHOR]

We study a dynamic common pool resource game in which current resource stock depends on resource extraction in the previous period. Our model shows that for a sufficiently high regrowth rate, there is no commons dilemma: the resource will be preserved indefinitely in equilibrium. Lower growth rates lead to depletion. Laboratory tests of the model indicate that favorable ecological characteristics are necessary but insufficient to encourage effective CPR governance. Before the game, we elicit individual willingness to follow a costly rule. Only the presence of enough rule-followers preserves the resource given favorable ecological conditions. [ABSTRACT FROM AUTHOR]