TY - JOUR
T1 - Consistent depth of reasoning in level-k models
AU - Cooper, David J.
AU - Fatas, Enrique
AU - Morales, Antonio J.
AU - Qi, Shi
PY - 2024/11/1
Y1 - 2024/11/1
N2 - Level- k models often assume that individuals employ a fixed depth of reasoning across different games. We study this assumption by having subjects make choices in five 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.
AB - Level- k models often assume that individuals employ a fixed depth of reasoning across different games. We study this assumption by having subjects make choices in five 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.
UR - http://www.scopus.com/inward/record.url?scp=105001342632&partnerID=8YFLogxK
U2 - 10.1257/mic.20210237
DO - 10.1257/mic.20210237
M3 - Article
SN - 1945-7669
VL - 16
SP - 40
EP - 76
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
IS - 4
ER -