Self-selection with non-equilibrium beliefs: Predicting behavior in a tournament experiment

Brünner, Tobias (2019) Self-selection with non-equilibrium beliefs: Predicting behavior in a tournament experiment. Journal of Economic Behavior & Organization . ISSN 0167-2681

Full content URL: https://doi.org/10.1016/j.jebo.2019.11.028

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Self-selection with non-equilibrium beliefs: Predicting behavior in a tournament experiment
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Abstract

In this study we use level-k thinking and a recently proposed model of non-equilibrium beliefs in dynamic games (PBNLK) to predict behavior in a tournament with self-selection. We find that the combination of level-k and PBNLK predicts both the population of types in the tournament, as well as the mean and variance of efforts better than Nash equilibrium, a static level-k model and other models of non-equilibrium beliefs. Our results show that non-equilibrium beliefs are an important determinant for the decision to compete in a tournament and the performance in that tournament. Moreover, a useful model of non-equilibrium beliefs should allow players to update their beliefs
during the course of the competition.

Keywords:level-k thinking, NLK, Bayesian updating, Tournament, Experiment, Competition
Subjects:L Social studies > L100 Economics
L Social studies > L120 Microeconomics
N Business and Administrative studies > N600 Human Resource Management
Divisions:Lincoln International Business School
ID Code:38977
Deposited On:28 Nov 2019 11:16

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