Forward induction: Thinking and behavior

Piotr Evdokimov; Aldo Rustichini

doi:10.1016/j.jebo.2016.05.002

Forward induction: Thinking and behavior

Piotr Evdokimov, Aldo Rustichini

Economics (Twin Cities)

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

Forward induction (FI) thinking is a theoretical concept in the Nash refinement literature which suggests that earlier moves by a player may communicate his future intentions to other players in the game. Whether and how much players use FI in the laboratory is still an open question. We designed an experiment in which detailed reports were elicited from participants playing a battle of the sexes game with an outside option. Many of the reports show an excellent understanding of FI, and such reports are associated more strongly with FI-like behavior than reports consistent with first mover advantage and other reasoning processes. We find that a small fraction of subjects understands FI but lacks confidence in others. We also explore individual differences in behavior. Our results suggest that FI is relevant for explaining behavior in games.

Original language	English (US)
Pages (from-to)	195-208
Number of pages	14
Journal	Journal of Economic Behavior and Organization
Volume	128
DOIs	https://doi.org/10.1016/j.jebo.2016.05.002
State	Published - Aug 1 2016

Bibliographical note

Funding Information:
We thank the participants of the University of Minnesota Mathematical Economics Workshop, the 2012 Fourth World Congress of the Game Theory Society, the 2013 ESA World Meetings, and the 2013 Midwest Theory Meetings for helpful comments and suggestions. Piotr Evdokimov acknowledges the financial support of Asociación Mexicana de Cultura . Aldo Rustichini thanks the NSF grant SES-1061817 .

Publisher Copyright:
© 2016 Elsevier B.V.

Keywords

First mover advantage
Forward induction
Talk aloud protocols

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10.1016/j.jebo.2016.05.002

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title = "Forward induction: Thinking and behavior",

abstract = "Forward induction (FI) thinking is a theoretical concept in the Nash refinement literature which suggests that earlier moves by a player may communicate his future intentions to other players in the game. Whether and how much players use FI in the laboratory is still an open question. We designed an experiment in which detailed reports were elicited from participants playing a battle of the sexes game with an outside option. Many of the reports show an excellent understanding of FI, and such reports are associated more strongly with FI-like behavior than reports consistent with first mover advantage and other reasoning processes. We find that a small fraction of subjects understands FI but lacks confidence in others. We also explore individual differences in behavior. Our results suggest that FI is relevant for explaining behavior in games.",

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AU - Rustichini, Aldo

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N2 - Forward induction (FI) thinking is a theoretical concept in the Nash refinement literature which suggests that earlier moves by a player may communicate his future intentions to other players in the game. Whether and how much players use FI in the laboratory is still an open question. We designed an experiment in which detailed reports were elicited from participants playing a battle of the sexes game with an outside option. Many of the reports show an excellent understanding of FI, and such reports are associated more strongly with FI-like behavior than reports consistent with first mover advantage and other reasoning processes. We find that a small fraction of subjects understands FI but lacks confidence in others. We also explore individual differences in behavior. Our results suggest that FI is relevant for explaining behavior in games.

AB - Forward induction (FI) thinking is a theoretical concept in the Nash refinement literature which suggests that earlier moves by a player may communicate his future intentions to other players in the game. Whether and how much players use FI in the laboratory is still an open question. We designed an experiment in which detailed reports were elicited from participants playing a battle of the sexes game with an outside option. Many of the reports show an excellent understanding of FI, and such reports are associated more strongly with FI-like behavior than reports consistent with first mover advantage and other reasoning processes. We find that a small fraction of subjects understands FI but lacks confidence in others. We also explore individual differences in behavior. Our results suggest that FI is relevant for explaining behavior in games.

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KW - Talk aloud protocols

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ER -

Forward induction: Thinking and behavior

Abstract

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