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Systems theory has garnered significant criticism from internationally recognized experts in the field of organizational analysis. However, a sector of criminal doctrine is adopting a strict approach to this theory to justify socio-legally the application of corporate criminal liability (this is a trend that has been embraced by the Spanish Supreme Court and is spreading throughout Latin America). The systemic idea of organization excludes the individuals who constitute and manage the company, dehumanizing it, separating corporate governance from the role played by individuals and even attributing human attributes to the company. In other words, the members that make up the organization, as well as the influences or constraints they generate in the context of the interaction of individuals within a corporation, are disregarded in the analysis. As an alternative, this text proposes the essential outlines of an "anthropic model" of corporate criminal liability, which is built on theoretically and experimentally validated notions and methodologies: neo-institutionalism, game theory and behavioral compliance. In this anthropic model, the adoption and implementation of an effective and adequate governance system to prevent irregularities (or crimes) does not depend on the system itself, but depends directly on the commitment and implementation of the "human component" of the organization. La teoría de sistemas ha recibido críticas significativas por parte de expertos internacionalmente reconocidos en el campo del análisis de las organizaciones. Sin embargo, cierto sector de la doctrina penal está adoptando un enfoque estricto de esta teoría para justificar sociojurídicamente la aplicación de la responsabilidad penal de las empresas (una tendencia que ha sido aceptada por el Tribunal Supremo español y se está extendiendo por América Latina). La idea sistémica de la organización excluye del análisis a los individuos que constituyen y gestionan la empresa, deshumanizándola, separando la gobernanza corporativa del papel desempeñado por los individuos e incluso atribuyendo atributos humanos a la empresa. En otras palabras, se desestiman en el análisis penal tanto a los miembros que conforman la organización como a las influencias o constricciones que originan en ese contexto de interacción de individuos que configura la corporación. Como alternativa, se proponen los lineamientos esenciales de un “modelo antrópico” de responsabilidad penal corporativa, construido sobre nociones y metodologías teórica y experimentalmente validadas: neoinstitucionalismo, teoría de juegos y “behavioral compliance”. En este modelo antrópico, la adopción e implementación de un sistema de gobernanza efectivo y adecuado para prevenir irregularidades (o delitos) no depende del sistema en sí, sino que pende directamente del compromiso e implementación efectiva por parte del “componente humano” de la organización. more...

In theory, it can be strategically advantageous for competitors to make themselves unpredictable to their opponents, for example, by variably mixing hostility and friendliness. Empirically, it remains open whether and how competitors make themselves unpredictable, why they do so, and how this conditions conflict dynamics and outcomes. We examine these questions in interactive attacker–defender contests, in which attackers invest to capture resources held and defended by their opponent. Study 1, a reanalysis of nine (un)published experiments (total N = 650), reveals significant cross-trial variability especially in proactive attacks and less in reactive defense. Study 2 (N = 200) shows that greater variability makes both attacker's and defender's next move more difficult to predict, especially when variability is due to occasional rather than (in)frequent extreme investments in conflict. Studies 3 (N = 27) and 4 (N = 106) show that precontest testosterone, a hormone associated with risk-taking and status competition, drives variability during attack which, in turn, increases sympathetic arousal in defenders and defender variability (Study 4). Rather than being motivated by wealth maximization, being unpredictable in conflict and competition emerges in function of the attacker's desire to win "no matter what" and comes with significant welfare cost to both victor and victim. [ABSTRACT FROM AUTHOR] more...

On November, 11th, 1630, Queen Marie de' Medici demanded, in vain, that her son, King Louis XIII, dismiss Richelieu as Principal Minister. Historians agree that this crisis known as the Journée des Dupes (the Day of the Dupes) was the true foundation stone of French "absolutism", but they disagree about whether the decision made by the Queen was rational. We analyze the historical setting of the crisis from a game theory viewpoint where the King and the Queen are two players. We consider two assumptions regarding the King and the Queen's cognitive skills. On the one hand, we assume that both the King and the Queen are perfectly rational. On the other hand, we assume that they both have limited cognitive skills (that is, they are level- k players). In this last case we propose a definition of naivety and we provide necessary and sufficient conditions for the Queen to be naive. We then study the Nash equilibrium when both the King and the Queen are perfectly rational as well as the behavioral theoretical solution of the game when they have limited cognitive skills. We rely on this study to propose an analytical narrative of the Journées des Dupes. We conclude that what we know of the historical facts does not allow us to reject the assumption that the Queen was perfectly rational, or, if she was not, that she had not been naive. [ABSTRACT FROM AUTHOR] more...

Many real-life examples—from interpersonal rivalries to international conflicts—suggest that people actively engage in competitive behavior even when it is negative sum (benefiting the self at a greater cost to others). This often leads to loss spirals where everyone—including the winner—ends up losing. Our research seeks to understand the psychology of such negative-sum competition in a controlled setting. To do so, we introduce an experimental paradigm in which paired participants have the option to repeatedly perform a behavior that causes a relatively small gain for the self and a larger loss to the other. Although they have the freedom not to engage in the behavior, most participants actively do so and incur substantial losses. We propose that an important reason behind the phenomena is shallow thinking—focusing on the immediate benefit to the self while overlooking the downstream consequences of how the behavior will influence their counterparts' actions. In support of the proposition, we find that participants are less likely to engage in negative-sum behavior, if they are advised to consider the downstream consequences of their actions, or if they are put in a less frenzied decision environment, which facilitates deeper thinking (acting in discrete vs. continuous time). We discuss how our results differ from prior findings and the implications of our research for mitigating negative-sum competition and loss spirals in real life. [ABSTRACT FROM AUTHOR] more...

This paper deploys a novel experiment to compare three behavioral theories that explain both selfish and non-selfish cooperation. The three theories fuse reputational cooperation (à la Kreps et al. (1982)) with the following three non-selfish motives respectively: caring about others (Altruism), being conscientious about cooperation (Duty), and enjoying social-efficiency (Efficiency-Seeking). We use reputational cooperation under purely Selfish preferences as a fourth theory. Our experimental design varies the decline-rate of future rewards, under which these theories predict rich patterns of behavior. Based on a Finite Mixture Model, the data is best explained if the modal subject types are Selfish and Efficiency-Seeking: We estimate that 40-49% of our subjects are Selfish, 36-45% are Efficiency-seeking, and 6-20% are Altruistic. We find little evidence for Duty players. [ABSTRACT FROM AUTHOR] more...

Humans often coordinate their actions in order to reach a mu-tually advantageous state. These circumstances are chieflymodeled by coordination games, a well-known class of gamesextensively studied in behavioral economics. In this work,we present the first resource-rational mechanistic approachto coordination games, showing that a variant of norma-tive expected-utility maximization acknowledging cognitivelimitations can account for several major experimental find-ings on human coordination behavior in strategic settings.Concretely, we show that Nobandegani et al.’s (2018) ratio-nal process model, sample-based expected utility, providesa unified account of (1) the effect of time pressure on hu-man coordination, and (2) how systematic variations of risk-vs. payoff-dominance affect coordination behavior. Impor-tantly, Harsanyi and Selten’s (1988) theory of equilibrium se-lection fails to account for (1-2). As such, our work suggeststhat the optimal use of limited cognitive resources may lie atthe core of human coordination behavior. We conclude by dis-cussing the implication of our work for understanding humanstrategic behavior, moral decision-making, and human ratio-nality. more...

The concept of Nash equilibrium has played a profound rolein economics, and is widely accepted as a normative stance forhow people should choose their strategies in competitive envi-ronments. However, extensive empirical evidence shows thatpeople often systematically deviate from Nash equilibrium. Inthis work, we present the first resource-rational mechanisticapproach to one-shot, non-cooperative games (ONG), show-ing that a variant of normative expected-utility maximizationacknowledging cognitive limitations can account for impor-tant deviations from the prescriptions of Nash equilibrium inONGs. Concretely, we show that Nobandegani et al.’s (2018)metacognitively-rational model, sample-based expected util-ity, can account for purportedly irrational cooperation rates ob-served in one-shot, non-cooperative Prisoner’s Dilemma, andcan accurately explain how cooperation rate varies dependingon the parameterization of the game. Additionally, our workprovides a resource-rational explanation of why people withhigher general intelligence tend to cooperate less in OPDs, andserves as the first (Bayesian) rational, process-level explana-tion of a well-known violation of the law of total probability inOPDs, documented by Shafir and Tversky (1992), which hasresisted explanation by a model governed by classical proba-bility theory for nearly three decades. Surprisingly, our workdemonstrates that cooperation can arise from purely selfish,expected-utility maximization subject to cognitive limitations. more...

Traditional game theory assumes that if framing does not affect a game's payoffs, it will not influence behavior. However, Rubinstein and Tversky (1993), Rubinstein, Tversky, and Heller (1996), and Rubinstein (1999) reported experiments eliciting initial responses to hide-and-seek and other types of game, in which subjects’ behavior responded systematically to non-neutral framing via decision labelings. Crawford and Iriberri (2007ab) proposed a level-k explanation of Rubinstein et al.'s results for hide-and-seek games. Heap, Rojo-Arjona, and Sugden's (2014) criticized Crawford and Iriberri's model on grounds of portability. This paper clarifies Heap et al.'s interpretation of their results and responds to their criticisms, suggesting a way forward. more...

Traditional game theory assumes that if framing does not affect a game's payoffs, it will not influence behavior. However, Rubinstein and Tversky (1993), Rubinstein, Tversky, and Heller (1996), and Rubinstein (1999) reported experiments eliciting initial responses to hide-and-seek and other types of game, in which subjects’ behavior responded systematically to non-neutral framing via decision labelings. Crawford and Iriberri (2007ab) proposed a level-k explanation of Rubinstein et al.'s results for hide-and-seek games. Heap, Rojo-Arjona, and Sugden's (2014) criticized Crawford and Iriberri's model on grounds of portability. This paper clarifies Heap et al.'s interpretation of their results and responds to their criticisms, suggesting a way forward. more...

We present a model that explains the process of strategy learning by the players in repeated normal-form games. The proposed model is based on a directed weighted graph, which we define and call as the game's dynamic graph. This graph is used as a framework by a learning algorithm that predicts which actions will be chosen by the players during the game and how the players are acting based on their gained experiences and behavioral characteristics. We evaluate the model's performance by applying it to some human-subject datasets and measure the rate of correctly predicted actions. The results show that our model obtains a better average hit-rate compared to that of respective models. We also measure the model's descriptive power (its ability to describe human behavior in the self-play mode) to show that our model, in contrast to the other behavioral models, is able to describe the alternation strategy in the Battle of the sexes game and the cooperating strategy in the Prisoners' dilemma game. [ABSTRACT FROM AUTHOR] more...

Copyright of Retos, Revista de Ciencias Administrativas y Económicas is the property of Universidad Politecnica Salesiana and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) more...

Human decision-making is largely analyzed by the field of behavioral game theory; however, little research has been done to compare adults’ and teenagers’ decision-making in game theory scenarios. A comparison of the two age groups could help future researchers better understand changes in decision-making with age. To do so, 146 participants (101 adults, 45 teenagers) from X County were surveyed on what their decision would be in the Prisoner’s Dilemma and how much certain decision-making factors influenced their decision. Results showed that there is no significant relationship between age group and rational decision making. Additionally, it was found that “fairness” guided adult decision-making the most while “trust” guided teenage decision-making the most. Such results point towards little to no difference between adults’ and teenagers’ rationality, but it is clear that the two age groups are guided by different decision-making factors within the Prisoner’s Dilemma. more...

Gambits are central to human decision‐making. Our goal is to provide a theory of Gambits. A Gambit is a combination of psychological and technical factors designed to disrupt predictable play. Chess provides an environment to study gambits and behavioral game theory. Our theory is based on the Bellman optimality path for sequential decision‐making. This allows us to calculate the Q$$ Q $$‐values of a Gambit where material (usually a pawn) is sacrificed for dynamic play. On the empirical side, we study the effectiveness of a number of popular chess Gambits. This is a natural setting as chess Gambits require a sequential assessment of a set of moves (a.k.a. policy) after the Gambit has been accepted. Our analysis uses Stockfish 14.1 to calculate the optimal Bellman Q$$ Q $$‐values, which fundamentally measures if a position is winning or losing. To test whether Bellman's equation holds in play, we estimate the transition probabilities to the next board state via a database of expert human play. This then allows us to test whether the Gambiteer is following the optimal path in his decision‐making. Our methodology is applied to the popular Stafford and reverse Stafford (a.k.a. Boden–Kieretsky–Morphy) Gambit and other common ones including the Smith–Morra, Goring, Danish and Halloween Gambits. We build on research in human decision‐making by proving an irrational skewness preference within agents in chess. We conclude with directions for future research. [ABSTRACT FROM AUTHOR] more...

This paper reconsiders Joseph Farrell׳s (1987) and Matthew Rabin׳s (1994) analyses of coordination via preplay communication, focusing on Farrell׳s analysis of Battle of the Sexes. Replacing their equilibrium and rationalizability assumptions with a structural non-equilibrium model based on level-k thinking, I reevaluate FR׳s assumptions on how players use language and their conclusions on the limits of communication in bringing about coordination. The analysis partly supports their assumptions about how players use language, but suggests that their “agreements” do not reflect a full meeting of the minds. A level-k analysis also yields very different conclusions about the effectiveness of communication. more...

Research on small repeated decisions from experience suggests that people often behave as if they underweight rare events and choose the options that are frequently better. In a pandemic, this tendency implies complacency and reckless behavior. Furthermore, behavioral contagion exacerbates this problem. In two pre-registered experiments (Ntotal = 312), we validate these predictions and highlight a potential solution. Groups of participants played a repeated game in one of two versions. In the basic version, people clearly preferred the dangerous reckless behavior that was better most of the time over the safer responsible behavior. In the augmented version, we gave participants an additional alternative abstracting the use of an application that frequently saves time but can sometimes have high costs. This alternative was stochastically dominated by the responsible choice option and was thus normatively irrelevant to the decision participants made. Nevertheless, most participants chose the new (“irrelevant”) alternative, providing the first clear demonstration of underweighting of rare events in fully described social games. We discuss public policies that can make the responsible use of health applications better most of the time, thus helping them get traction despite being voluntary. In one field demonstration of this idea amid the COVID-19 pandemic, usage rates of a contact tracing application among nursing home employees more than tripled when using the app also started saving them a little time each day, and the high usage rates sustained over at least four weeks. more...

Traditional decision-making models assume full rationality of all actors. Nevertheless, the practice has shown that the behavior and choices of actors are influenced by many factors such as motives, beliefs, opinions, personal and social preferences, as well as cognitive biases. Moreover, it has already been proven that people have limitations in their ability to collect relevant information and respond to them, i.e., they are bounded rational. All this has contributed to the development of behavioral models in many disciplines including game theory. This paper provides a detailed review of the literature regarding behavioral models of strategic decision making. Bounded rationality and other cognitive biases in the strategic interactions are illustrated through the findings of numerous experimental studies. more...

Parallel imports of gray products across markets are a worldwide concern for manufacturers. Extant research has focused on parallel imports of regular goods that do not provide status value. In this paper, we investigate parallel imports of conspicuously consumed status goods. We consider a manufacturer who directly sells a status product to consumers in two markets that value the product differently and a gray marketer that can import the product across markets. Our analysis shows that, though parallel imports decrease a manufacturer's profit from selling regular goods, it can increase their profit from selling status goods. Furthermore, the manufacturer decides whether to use the same or different aesthetic design for products across markets. With the same design, the gray and manufacturer‐authorized products look identical, while different designs make them distinguishable, which affects their status value. We find that parallel imports benefit the manufacturer in a broader range of situations under the different‐design strategy, whereas the same‐design strategy increases the gray marketer's profit. When the two markets are sufficiently similar, the manufacturer uses the same design to induce parallel imports. When the two markets are sufficiently different, the manufacturer uses different designs to either deter parallel imports or improve their profit while competing with the gray marketer. [ABSTRACT FROM AUTHOR] more...

This paper is about people's strategic behavior as observed through experiments. The research question posed in this paper is how players (primarily children) learn in complex strategic situations that they have never encountered before. We examine data from various games played during popular game theory lectures and present findings about players' strategic learning progress while competing with other players. Four "pick a number" games with similar-looking rules but very different properties were investigated. These games were presented to various groups of listeners. The collected data is available for replication and analysis in an open repository. In this paper, we analyze data and propose an agent-based model of a beauty pageant game to explain observed behavior. Finally, we discuss the findings, hypotheses to test, and open questions for future research. more...

Objective: We aim to learn about the cognitive mechanisms governing the decisions of attackers and defenders in cybersecurity involving intrusion detection systems (IDSs). Background: Prior research has experimentally studied the role of the presence and accuracy of IDS alerts on attacker's and defender's decisions using a game-theoretic approach. However, little is known about the cognitive mechanisms that govern these decisions. Method: To investigate the cognitive mechanisms governing the attacker's and defender's decisions in the presence of IDSs of different accuracies, instance-based learning (IBL) models were developed. One model (NIDS) disregarded the IDS alerts and one model (IDS) considered them in the instance structure. Both the IDS and NIDS models were trained in an existing dataset where IDSs were either absent or present and they possessed different accuracies. The calibrated IDS model was tested in a newly collected test dataset where IDSs were present 50% of the time and they possessed different accuracies. Results: Both the IDS and NIDS models were able to account for human decisions in the training dataset, where IDS was absent or present and it possessed different accuracies. However, the IDS model could accurately predict the decision-making in only one of the several IDS accuracy conditions in the test dataset. Conclusions: Cognitive models like IBL may provide some insights regarding the cognitive mechanisms governing the decisions of attackers and defenders in conditions not involving IDSs or IDSs of different accuracies. Application: IBL models may be helpful for penetration testing exercises in scenarios involving IDSs of different accuracies. [ABSTRACT FROM AUTHOR] more...

Lay intuition suggests that some people are better than others at strategic social interaction. Nonetheless, identifying reliable predictors of individual differences in negotiation performance has been difficult. In this investigation, we hypothesized that an individuals' skill in understanding the structure of socially interdependent situations, and in best responding to others' likely behavior in such situations, should predict their negotiation performance. We adapted existing and novel social guessing games to measure such skills. In a series of studies with students and business executives in Russia and Sweden, performance in the guessing games predicted better individual outcomes and better joint outcomes in dyadic negotiations. Guessing‐game performance remained predictive of both outcomes after proxies for general mental ability were controlled for. Potential applications to larger‐scale phenomena are discussed. [ABSTRACT FROM AUTHOR] more...

This paper presents data of medical choices determining physicians’ profit and patients’ health benefit under three levels of market competition: monopoly, duopoly, and quadropoly. The data was collected from 136 German university students in an incentivized laboratory experiment. The designed experimental parameters and the formula for computing the payoff matrices of the games are described in this paper as well. This data was analyzed by Ge and Godager [5] who employed quantal response equilibrium choice models to investigate the relationship between market competition and determinism in behavior under a quantal response equilibrium paradigm. This data contributes to future investigation on alternative game theoretic equilibrium concepts and the development of empirical methods for studying strategic choice behavior. more...

This paper revisits Myerson and Satterthwaite 's (1983) classic analysis of mechanism design for bilateral trading, replacing equilibrium with a level- k model of strategic thinking and focusing on direct mechanisms. The revelation principle fails for level- k models, so restricting attention to direct mechanisms and imposing incentive-compatibility are not without loss of generality. If, however, only direct, level- k -incentive-compatible mechanisms are feasible and traders' levels are observable, Myerson and Satterthwaite's characterization of mechanisms that maximize traders' total surplus subject to incentive constraints generalizes qualitatively to level- k models. If only direct, level- k -incentive-compatible mechanisms are feasible but traders' levels are not observable, generically a particular posted-price mechanism maximizes traders' total expected surplus subject to incentive constraints. If direct, non-level- k -incentive-compatible mechanisms are feasible and traders best respond to them, total expected surplus-maximizing mechanisms may take completely different forms. [ABSTRACT FROM AUTHOR] more...

Copyright of Balkan & Near Eastern Journal of Social Sciences (BNEJSS) is the property of Balkan & Near Eastern Journal of Social Sciences (BNEJSS) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) more...

Research on small repeated decisions from experience suggests that people often behave as if they underweight rare events and choose the options that are frequently better. In a pandemic, this tendency implies complacency and reckless behavior. Furthermore, behavioral contagion exacerbates this problem. In two pre-registered experiments (Ntotal = 312), we validate these predictions and highlight a potential solution. Groups of participants played a repeated game in one of two versions. In the basic version, people clearly preferred the dangerous reckless behavior that was better most of the time over the safer responsible behavior. In the augmented version, we gave participants an additional alternative abstracting the use of an application that frequently saves time but can sometimes have high costs. This alternative was stochastically dominated by the responsible choice option and was thus normatively irrelevant to the decision participants made. Nevertheless, most participants chose the new("irrelevant") alternative, providing the first clear demonstration of underweighting of rare events in fully described social games. We discuss public policies that can make the responsible use of health applications better most of the time, thus helping them get traction despite being voluntary. In one field demonstration of this idea amid the COVID-19 pandemic, usage rates of a contact tracing application among nursing home employees more than tripled when using the app also started saving them a little time each day, and the high usage rates sustained over at least four weeks. [ABSTRACT FROM AUTHOR] more...

The level-k literature classifies subjects into different Lk types by their observed levels of reasoning in games. However, it remains unclear whether the observed level-k behavior is determined by belief or reasoning ability. This study proposes a strategy to identify the ability-boundedLk subjects, who could not reason more than k steps of iterated best responses and thus have reached the upper bounds of their reasoning capacity. The identification utilizes a combination of simultaneous and sequential ring games. In the sequential games, it requires an extra step to best respond as Lk, and thus the ability-bounded ones would fail the task. Results show that more than half of the L2 and L3 subjects are ability-bounded. Additionally, subjects' CRT scores, a measure of their cognitive ability, support the separation of the ability-bounded types. The findings suggest that both belief and reasoning ability could determine the observed levels, and thus one must be cautious when trying to infer belief or ability from the existing level-k data. [ABSTRACT FROM AUTHOR] more...

Competition between tourism destinations is intensifying, and collaboration between stakeholders can increase destination appeal. Until now, such collaboration has limited itself to governance and marketing. To advance an earlier proposal of destination revenue management (RM), we develop a conceptual framework of instigators and limiters to such cooperation between tourism operators. Next, we synthesize the framework with behavioral game theory (BGT), an extension of classical game theory that challenges the utility maximization-based outcomes of the classical version. BGT incorporates additional aspects, such as reciprocity and fairness, into bargaining and cooperation and supports the feasibility of forming a RM alliance. Based on BGT findings, our synthesis provides theoretical and practical insights into how destinations can improve their competitiveness through cooperation in two important RM areas, pricing and demand creation. [ABSTRACT FROM AUTHOR] more...

We show that the long-run prices from independent machine learning algorithms depend on the informational value of price experiments. If low, the long-run prices are consistent with the static Nash equilibrium; however, if high, the long-run prices are supra-competitive. Motivated by their increasing prevalence, we study outcomes when competing sellers use machine learning algorithms to run real-time dynamic price experiments. These algorithms are often misspecified, ignoring the effect of factors outside their control, for example, competitors' prices. We show that the long-run prices depend on the informational value (or signal-to-noise ratio) of price experiments: if low, the long-run prices are consistent with the static Nash equilibrium of the corresponding full information setting. However, if high, the long-run prices are supra-competitive—the full information joint monopoly outcome is possible. We show that this occurs via a novel channel: competitors' algorithms' prices end up running correlated experiments. Therefore, sellers' misspecified models overestimate the own price sensitivity, resulting in higher prices. We discuss the implications on competition policy. [ABSTRACT FROM AUTHOR] more...

What are the mental operations involved in game theoretic decision making? How do players deliberate (intelligently, but perhaps imperfectly) about strategic interdependencies and ultimately decide on a strategy? We address these questions using an evidence accumulation model, with bidirectional connections between preferences for the strategies available to the decision maker and beliefs regarding the opponent's choices. Our dual accumulator model accounts for a variety of behavioral patterns, including limited iterated reasoning, payoff sensitivity, consideration of risk-reward tradeoffs, and salient label effects, and it provides a good quantitative fit to existing behavioral data. In a comparison with other popular behavioral game theoretic models fit at the individual subject level to choices across a set of games, the dual accumulator model makes the most accurate out-of-sample predictions. Additionally, as a cognitive-process model, it can also be used to make predictions about response time patterns, time pressure effects, and attention during deliberation. Stochastic sampling and dynamic accumulation, cognitive mechanisms foundational to decision making, play a critical role in explaining well-known behavioral patterns as well as in generating novel predictions. [ABSTRACT FROM AUTHOR] more...

Some managers are better than others. Using the cognitive hierarchy framework of Camerer, Ho, and Chong (2004), the authors develop a structural econometric model that estimates the level of strategic thinking. In the model, firms with a high level of strategic thinking are more likely to correctly conjecture the expected actions of their competitors. The authors apply this model to decisions by managers at 2233 Internet service providers of whether to offer their customers access through 56K modems in 1997. The model is validated by showing that firms with a higher estimated probability of strategic thinking were more likely to have survived through April 2007. The estimation results show considerable heterogeneity in the degree to which firms behave strategically and suggest that strategic ability affects marketing outcomes; specifically, a simulated increase in strategic ability means that fewer firms offer the technology to their customers. [ABSTRACT FROM AUTHOR] more...

This paper proposes a structural non-equilibrium model of initial responses to incomplete-information games based on "level-k" thinking, which describes behavior in many experiments with complete-information games. We derive the model's implications in first- and second-price auctions with general information structures, compare them to equilibrium and Eyster and Rabin's (2005) "cursed equilibrium," and evaluate the model's potential to explain behavior in auction experiments. The level-k model generalizes many insights from equilibrium auction theory. It also allows a unified explanation of the winner’s curse in common-value auctions and overbidding in those independent-private-value auctions without the uniform value distributions used in most experiments. more...

"Hide-and-Seek" games are zero-sum two-person games in which one player wins by matching the other's decision and the other wins by mismatching. Although such games are often played on cultural or geographic "landscapes" that frame decisions non-neutrally, equilibrium ignores such framing. This paper reconsiders the results of experiments by Rubinstein, Tversky, and others whose designs model non-neutral landscapes, in which subjects deviated systematically from equilibrium in response to them. Comparing alternative explanations theoretically and econometrically suggests that the deviations are best explained by a structural non-equilibrium model of initial responses based on "level-k" thinking, suitably adapted to non-neutral landscapes. more...

We study a simple model of similarity-based global cumulative imitation in symmetric games with large and ordered strategy sets and a salient winning player. We show that the learning model explains behavior well in both field and laboratory data from one such "winner-takes-all" game: the lowest unique positive integer game in which the player that chose the lowest number not chosen by anyone else wins a fixed prize. We corroborate this finding in three other winner-takes-all games and discuss under what conditions the model may be applicable beyond this class of games. Theoretically, we show that global cumulative imitation without similarity weighting results in a version of the replicator dynamic in winner-takes-all games. [ABSTRACT FROM AUTHOR] more...

This study experimentally examines the role of a compromise option in a repeated battle-of-the-sexes game. In a random matching environment, we find that compromise serves as an effective focal point and facilitates coordination, but fails to improve efficiency. However, in a fixed-partnership environment, compromise deters subjects from learning to play alternation, which is a more efficient, but arguably more complex strategy. As a result, compromise hurts efficiency by allowing subjects to coordinate on the less efficient outcome. In a follow-up experiment, we find that many compromisers switch to alternation after playing the repeated game multiple times. These results suggest that subjects teach and learn to use the alternation strategy from each other. [ABSTRACT FROM AUTHOR] more...

• The article analyzes the impact of psychological game theory (PGT) using citations. • Three important areas are analyzed: basic framework, reciprocity, and guilt aversion. • Citations in the Web of Science to 12 highly-influential PGT articles are analyzed. • PGT has impact on economics, psychology, management, business, law, and many other areas. • We see a consistent increase in the number of articles citing PGT over the years. The article analyzes the impact of three important areas in psychological game theory (PGT), namely the basic framework, reciprocity, and guilt aversion. Using a set of 12 highly-influential articles in these areas, their citing articles in the Web of Science are analyzed in terms of research areas (Web of Science categories), citing journals, citing authors, and publication years. The results show that the discipline most influenced by PGT is economics, but also that PGT has impact on other disciplines such as psychology, management, business, law, operations research and many others. In terms of the journals citing PGT the most, and probably also contributing to PGT the most articles, the Journal of Economic Behavior and Organization is clearly the most important journal. Finally, analysis of citing articles by year shows a consistent and steady increase in the number of articles citing PGT over the years, suggesting that PGT has gained significant attention in recent years. [ABSTRACT FROM AUTHOR] more...

When complex procurement projects are conducted, it is often not possible to write complete contracts. As a consequence, the relationship between buyer and supplier is important for the success of the project. In this paper we investigate the claim that auctions in procurement can be detrimental for the buyer–supplier relationship, which is in line with the observation that reverse auctions are less frequently conducted if projects are complex. A poor relationship can result in a decrease in trust on the part of the buyer during the sourcing process and an increase in the supplier's opportunistic behavior following sourcing. We consider a setting in which the winning supplier decides on the level of quality to provide to the buyer, and we compare a standard reverse auction and a buyer-determined reverse auction, both analytically and in the laboratory. We find that the buyer-determined reverse auction can perform better than the standard reverse auction from both the buyer's and the suppliers' perspective. In a buyer-determined reverse auction, it may be optimal for the buyer to select the supplier who submitted a higher bid, which may in turn induce this supplier to deliver higher quality. Standard auctions, however, yield lower prices but reduce cooperation. The degree of trust, as reflected by a larger number of transactions and a higher average efficiency of trade, is significantly higher in buyer-determined reverse auctions. Theoretical reasoning based on other-regarding preferences organizes our data well. This paper was accepted by Serguei Netessine, operations management. [ABSTRACT FROM AUTHOR] more...

We propose a framework in order to econometrically estimate case-based learning and apply it to empirical data from twelve 2 × 2 mixed strategy equilibria experiments. Case-based learning allows agents to explicitly incorporate information available to the experimental subjects in a simple, compact, and arguably natural way. We compare the estimates of case-based learning to other learning models (reinforcement learning and self-tuned experience weighted attraction learning) while using in-sample and out-of-sample measures. We find evidence that case-based learning explains these data better than the other models based on both in-sample and out-of-sample measures. Additionally, the case-based specification estimates how factors determine the salience of past experiences for the agents. We find that, in constant sum games, opposing players’ behavior is more important than recency and, in non-constant sum games, the reverse is true. more...