Cost of reasoning and strategic sophistication (Q2221299)
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English | Cost of reasoning and strategic sophistication |
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Cost of reasoning and strategic sophistication (English)
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26 January 2021
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Summary: I designed an experiment to study the persistence of the prevailing levels of reasoning across games. Instead of directly comparing the \(k\)-level(s) of reasoning for each game, I used cognitive load to manipulate the strategic environment by imposing variations on the subject's cost of reasoning and their first- and second-order beliefs. Subjects have systematic changes in \(k\)-level(s) of reasoning across games. That finding suggests that subjects are responsive to changes in the strategic environment. Changes in \(k\)-level(s) of reasoning are mostly consistent with the endogenous depth of reasoning model when subjects are more cognitively capable or facing less cognitively capable opponents. Subjects have cognitive bounds, but often choose a lower-type action due to their beliefs about their opponents. Finally, cognitive ability plays a significant role in subjects making strategic adjustments when facing different strategic environments.
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level-\(k\) reasoning
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guessing game
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cognitive load
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endogenous depth of reasoning
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strategic thinking
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