Beliefs and Endogenous Cognitive Levels: An Experimental Study

Uses a laboratory setting to manipulate our subjectsE¼ beliefs about the cognitive levels of the players they are playing against. We show that in the context of the 2/3 guessing game, individual choices crucially depend on their beliefs about the level of others. Hence, a subjectE¼s true cognitive level may be different than the one he exhibits in a game with the difference being attributed to his expectations about the sophistication of the players he is playing against.

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