[VCEE Seminar] VCEE Seminar 24.6.2022

[Mailing list of the VCEE seminar series]

Dear all,

You are cordially invited to attend the VCEE seminar on Friday, Jun 24  from 10:30-12:00 (SR 14). 

Guillaume Frechette (New York University)

 

Beliefs in Repeated Games∗



Abstract
This paper uses a laboratory experiment to study beliefs and their relation-
ship to action and strategy choices in finitely and indefinitely repeated prison-
ers’ dilemma games. We find subjects’ beliefs about the other player’s action
are generally accurate despite some small systematic deviations correspond-
ing to early pessimism in the indefinitely repeated game and late optimism in
the finitely repeated game. The data reveals a close link between beliefs and
actions that differs between the two games. In particular, the same history
of play is associated with different beliefs, and the same beliefs with different
action choices in each game. Moreover, we find beliefs anticipate the evolution
of behavior within a supergame, changing in response to the history of play (in
both games) and the number of rounds played (in the finitely repeated game).
We then use the subjects’ beliefs over actions in each round to identify their
beliefs over supergame strategies played by the other player. We find these
beliefs correctly capture the different classes of strategies used in each game.
Importantly, subjects using different strategies have different beliefs, and for
the most part, strategies are subjectively rational given beliefs. The results
also suggest subjects tend to underestimate the likelihood that others use less
cooperative strategies. In the finitely repeated game, this helps explain the
slow unravelling of cooperation. In the indefinitely repeated game, persistence
of heterogeneity in beliefs underpins the difficulty of resolving equilibrium se-
lection.

 

 

 

		

If you are interested in meeting Guillaume Frechette after the seminar (meeting slots of 30’  room no 05.330 (Wagner Zimmer) please register via this doodle-link: 

 

https://doodle.com/meeting/participate/id/b2RWgjJb

 

Best regards,

Gabriele Prochaska

 

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