Discussion Paper No. 614

STATED BELIEFS AND PLAY INNORMAL-FORM GAMES

Miguel A. Costa-Gomes
andGeorg Weizsäcker

August 2004

The Institute of Social and Economic Research
Osaka University
6-1 Mihogaoka, Ibaraki, Osaka 567-0047, Japan

STATED BELIEFS AND PLAY IN NORMAL-FORM GAMES1
By Miguel A. Costa-Gomes, University of York, U.K.
and Georg Weizsäcker, Harvard University, U.S.A.

This Version: July 15, 2004
Using data on one-shot games, we investigate the assumption that players respond tounderlying expectations about their opponent’s behavior. In our laboratory experiments, subjects
play a set of 14 two-person 3x3 games, and state first order beliefs about their opponent’s
behavior. The sets of responses in the two tasks are largely inconsistent. Rather, we findevidence that the subjects perceive the games differently when they (i) choose actions, and (ii)state beliefs – they appear to pay more attention to the opponent’s incentives when they state
beliefs than when they play the games. On average, they fail to best respond to their own statedbeliefs in almost half of the games. The inconsistency is confirmed by estimates of a unified
statistical model that jointly uses the actions and the belief statements. There, we can control fornoise, and formulate a statistical test that rejects consistency. Effects of the belief elicitation
procedure on subsequent actions are mostly insignificant.
Keywords: noncooperative games, experimental economics, beliefs, bounded rationality(JEL C72, C92, C51, D84)

1

We are grateful to Colin Camerer, Vincent Crawford, Guillaume Frechette, Edward Glaeser, David
Strömberg, Paul Tetlock, Alvin Roth, Joel Watson, and especially to Drew Fudenberg for their comments,
to Robert Winkler and Frank Yates for advice, and to Alvin Roth and the Harvard Business School for
their generous funding of this experiment. We have also benefited from the opportunity to present aspectsof this work at CalTech, Harvard, Humboldt University Berlin, IIES Stockholm, ISER-Osaka University,
IZA Bonn, LBS, LSE, MPI Jena, NYU, Oxford, Rutgers, Tilburg, Pompeu Fabra, ULB, UC San Diego,
UCL, and Universities of Amsterdam, Exeter, Nottingham, Vienna, and Warwick. Costa-Gomes wasaffiliated with the Harvard Business School at the beginning of this project, and his work on this projectcontinued while he was visiting CalTech and ISER-Osaka. E-mail addresses: mcg6@york.ac.uk andweizsack@fas.harvard.edu.

1. Introduction
In most games of economic interest a player’s optimal choice of play depends on the
belief that she holds about her opponents’ actions. Accordingly, most choice models assume thata player’s actions are driven by her beliefs. However, when a game is played for the first time,
the question arises whether players indeed hold a meaningful set of beliefs about theiropponents’ actions, and whether their actions are governed by such beliefs. Experimental oneshot games provide a good environment to investigate this question, as they can be played
without preceding information or feedback about the opponent’s behavior. Furthermore,experiments allow us to collect additional data that are informative about subjects’ beliefs about
the behavior of their opponents. In particular, we can explicitly ask subjects to state their beliefs,
using incentive compatible mechanisms that are based on rewarding the accuracy of those belief
statements.2
Previous experiments with one-shot games have revealed systematic deviations fromequilibrium predictions, and there is a long running interest in uncovering players’ mental
models of others in these environments. Several models of boundedly rational behavior havebeen proposed in the literature (in the context of normal-form games see, among others, Stahl
and Wilson, 1994, 1995, Nagel, 1995, McKelvey and Palfrey, 1995, McKelvey, Palfrey, andWeber, 2000, Costa-Gomes, Crawford, and Broseta, 2001, Weizsäcker, 2003, Goeree and Holt,
2004, and Camerer, Ho, and Chong, 2004) with the purpose of organizing observed behavior in asystematic manner. Most of these studies consider only subjects’ actions in games, and theanalyzed models differ from equilibrium mostly to the extent that equilibrium beliefs are
replaced with other beliefs. Therefore, we can deepen our understanding of the explanatory
power of these models by contrasting their predicted beliefs with subjects’ elicited beliefs. Thisdimension has not been previously addressed.3 Additionally, we can ask at a very general level
whether the presumption that actions are driven by underlying beliefs finds support in the data.
2

The use of direct-belief elicitation methods is increasingly popular in experimental economics. Papers in this area
include McKelvey and Page (1990), Offerman, Sonnemans, and Schram (1996), Croson (2000), Dufwenberg andGneezy (2000), Wilcox and Feltovich (2000), Mason and Philips (2001), Nyarko and Schotter (2002), and Camerer,
Ho, Chong, and Weigelt (2002, expands on a 1988 talk). Many of these studies are concerned with players’
expectations in public-goods games, and/or the research questions are related to issues of fairness and reciprocity.
Exceptions are the studies by Mason and Philips (2001), Nyarko and Schotter (2002) who use elicited beliefs to
explain behavior in a repeated normal-form game, and Camerer, Ho, Chong, and Weigelt (2002) who do the same ina repeated extensive-form game. Haruvy (2002) descriptively discusses beliefs in a set of normal-form games.
3
Costa-Gomes, Crawford, and Broseta (2001) use subjects’ information searches to make inferences about beliefs.
2Our experiment involves a series of 14 two-person normal-form games. The subjects
make two kinds of decisions about each game: they choose an action, and they decide what
belief to state about their opponent’s action choice. We find that the decision behavior isinconsistent, that is, subjects’ actions are very often not best responses to their own stated beliefs.
Out of three available actions, subjects choose the action that is the best response to their statedbelief in little over half of the games.4 However, this is not sufficient evidence to conclude thatthe subjects do not hold meaningful beliefs and act on them, because one should allow for the
possibility of imperfect optimization or other disturbances. Perhaps, merely the noise level ineither of the two data sets (actions, belief statements) is high enough to generate such a low rate
of best responses.
The existing literature regularly accounts for the possibility that players are imperfectoptimizers, in the sense that observed action choices are allowed to differ from the intended
actions. But in the context of belief elicitation in games, imperfect decisions are usually notdiscussed. This is inconsistent, as we should also account for the possibility that subjects’ statedbeliefs might not be optimal or perfectly revealing, given the “true” beliefs that a subject may or
may not hold. In the extreme case, the belief statements that we observe may contain little or no
information about underlying perceptions of the game, which would make a comparison with theaction data worthless.
We exploit the fact that subjects are rewarded also for their belief statements, toformulate a model of payoff-sensitive decision-making for both tasks.5 In particular, we assume
that in both tasks, the subjects respond to a set of latent or underlying beliefs about the
opponent’s choice probabilities (as opposed to the belief statements, which we observe), andrespond to these beliefs when generating the data. We can then estimate the underlying beliefs
via maximum-likelihood within a standard probabilistic-choice model.6 To test for consistency of
behavior between the two tasks, we estimate subjects’ underlying beliefs from the data in bothtasks separately, and ask whether the results coincide. We proceed game by game, and test the4

In the ten dominance-solvable games dominance initially occurs only for one of the players.
Non-experimental empirical papers that use subjective expectations and other choice data for the purpose ofstatistical inference are faced with the limitation that respondents’ stated expectations are typically not monetarily
rewarded for their accuracy.
6
As in most of the literature on game play data we use a logit specification of subjects’ decisions. In our combinedmodel of behavior in Section 4, both kinds of decisions (actions and stated beliefs) follow this specification.
5

3

hypothesis that behavior in the two tasks is based on the same set of beliefs.7 We reject thishypothesis in the majority of cases.
The observed data patterns also suggest that subjects take their opponent’s decision
problem less into account when they choose their own actions than when they state theirpredictions about the opponent’s behavior. These observations hold consistently over thedifferent order treatments in the experiment, i.e. regardless of whether subjects chose actions
before they stated beliefs or vice versa. In one of our treatments, belief statements were elicitedimmediately before the actions were chosen in each game, which raised the rate of best responses
slightly. Subjects on average chose best responses to their own stated beliefs in 8.41 out of 14
games in this treatment, as compared to an average of 7.22 out of 14 in the other treatments.
Investigation of a set of behavioral models (taken from the previous literature) suggests
the aforementioned pattern of deviation: subjects’ play of the games is naïve, as if they expected
their opponents to play randomly with uniform probabilities. But in the belief statement task they
appear to take the opponent’s incentives more into account, and predict roughly that theiropponents are likewise responding to a uniform belief. Although the average prediction acrosssubjects often turns out to be quite accurate, the two behaviors are inconsistent, because if asubject is able to correctly predict that the opponent will play the game in a fairly naïve manner,then she should best respond to that prediction, instead of playing naïvely herself.
The observed inconsistencies between the data sets generated in our experiment suggestthat we need to be cautious when evaluating elicited beliefs to understand action choices. Others,e.g. Bertrand and Mullainathan (2001), have raised similar concerns about the collection ofsurvey data to generate predictions about choice behavior.8 Survey responses as well as statedexpectations in games may be generated by different motivations or considerations than the
choices made by the same decision-makers. Most critiques of the reliability of survey responses,
however, do not specifically address the reasoning process about other decision-makers, whereas

7

A natural concern is that such tests rely on additional assumptions that come with specifying the probabilisticchoice model, as discussed in Section 4. In our case, perhaps the most critical assumptions are those regarding the
distribution of belief “types” in the subject population. We therefore conduct the tests for a range of possible
distributions.
8
Bertrand and Mullainathan (2001) outline a model of stating subjective attitudes with noise, roughly comparable toour model of noisy belief statements, and discuss potential misinterpretations that result if orthogonality of the error
term with other variables is violated. Mitchell, Smith, and Weale (2002) and others analyze firm-level categoricalsurvey data that express predictions about economic activity, including the production level generated by the
respondent’s organization.
4

the distortions that we observe appear to be caused by a different perception of the opponent’s
incentives, which is only relevant for games.
We note that our games come with a specific level of complexity (3x3) as well as a
specific and moderate level of monetary incentives, and that we are not attempting to draw
general conclusions from this set of games about what will happen in other strategic situations.
We merely view our results as suggesting that economists should start to ask about specificsituations at hand, whether it is reasonable to assume that decision-makers act on their beliefs
without much difficulty.
We also want to stress again that we confine our analysis to decisions and beliefs that arechosen without any previous feedback about the opponents’ behavior. In contexts of dynamic
game analyses (such as the existing studies about elicited beliefs in repeated games), one may
expect a closer correspondence between action choices and stated beliefs, as both should becontingent on the feedback that the decision-makers receive. Our design, however, does include
some opportunities for behavior to change over time. First and foremost, the different order
treatments enable us to answer the question whether the belief elicitation procedure itself had an
impact on behavior in our games. As outlined above, we do not find strong evidence for this. The
subjects’ actions do not change significantly if they are previously asked to predict theiropponent’s action. Secondly, the games were sequenced in a way that allows us to detect anotherkind of no-feedback learning: Since pairs of equivalent games were played by different subjects
both in the first and in the second half of each session, we can check whether the experience of
having played additional games affects the behavior of either action choices or belief statements.
We find no such evidence in our data, as the corresponding statistical tests yield rejection rates
that are within the limits of chance.
The paper is organized as follows. The experimental design is described in the next
section. Section 3 reports preliminary statistical tests, and discusses subjects’ compliance, andexpected compliance of other subjects, with a series of boundedly rational models of behavior innormal-form games. It also assesses the accuracy of the belief statements, and gauges themonetary losses that subjects incurred by not giving consistent sets of responses. In Section 4 weuse actions alone, belief statements alone, and a combination of both, to estimate the subjects’
underlying beliefs that best describe their decisions. In Section 5, we consider several existing5

boundedly rational models of behavior in normal-form games and investigate how well they can
explain subjects’ actions and stated beliefs. Section 6 concludes.
2. Experimental Design
A. Overall Structure
Our experiment consisted of two sessions for each of five treatments, which we label A1,
1A, 21A, 21A21A, and 1A1A. (The names of the treatments reflect the order of the tasks: E.g.,
in treatment A1, subjects chose their actions before stating first order beliefs. “A” stands foractions, “1” for first order beliefs, and “2” for second order beliefs.)9 Of these, only thetreatments A1, 1A, and 1A1A will be reported in the data analysis, as explained below. The
sessions were preceded by two pilot sessions, one for the A1 treatment and the other for the 1A
treatment. All sessions were run in the CLER at Harvard Business School using its local area
network of PCs. We now describe our treatments, beginning with A1 and then explaining how
the others differed. Appendix A reproduces the instructions for the A1, the 1A, and the 1A1A
treatments.
Subjects were mainly undergraduate students at universities in the Boston area. All
treatments had subjects first reading some preliminary instructions, which described a strategic
decision situation (a game), and the 3x3 payoff-matrix associated with its normal-form
representation.10 Then subjects were required to pass an Understanding Test where they had todemonstrate that they knew how to map players’ actions in a game to outcomes, and outcomes toplayers’ payoffs. Subjects who failed the test were dismissed.11 Excluding these subjects we had
40, 42, 39, 31, and 46 subjects in treatments A1, 1A, 21A, 21A21A, and 1A1A respectively.
After this initial stage, subjects were told that the experiment would have three parts, but fromthen onwards, the treatments proceeded differently. In treatment A1, subjects first read the
instructions about how their choices of actions in the 14 games would be rewarded, and then9

Formally, a first order belief is a probability distribution defined over the actions the opponent can choose from. A
second order belief is a probability distribution defined over the space of first order beliefs. In our experiment: 1) astated first order belief specifies the probability with which a player expects his opponent to choose each of heravailable actions; 2) a stated second order belief is restricted to a point estimate of a second order belief, namely an
estimate of the player’s opponent stated first order belief.
10
Subjects were paid $5 show-up fee ($10 for the 1A1A treatment, which was conducted after a change in laboratory
guidelines), plus an early arrival fee of $3 in case they had arrived to the lab at least 5 minutes before the start of thesession.
11
The numbers of subjects dismissed were 2, 0, 1, 4, and 2 for the A1, 1A, 21A, 21A21A, and 1A1A treatments,
respectively.
6

played those games (Part I). After Part I, they read the instructions on stating first order beliefs
and how they would be rewarded for the accuracy of their statements. Next, they stated their firstorder beliefs for all 14 games (Part II). Then they read instructions on stating second orderbeliefs and how they would be rewarded for the accuracy of their statements, after which theystated their second order beliefs for all 14 games (Part III).12 This procedure guaranteed us thatwhen subjects played the games, they had not been told about first order beliefs, and that when
they stated their first order beliefs, the subsequent second order belief statements had not yet
been mentioned. Subjects only received feedback at the end of the experiment. Subjects’ statedbeliefs could be any three numbers (not necessarily integers) as long as they would add up to100.
In this paper we restrict ourselves to the analysis of subjects’ actions and stated first orderbeliefs.13 Thus, we only analyze the data of the A1, 1A, and 1A1A treatments. In the other twotreatments, 21A, and 21A21A, the players’ stated first order beliefs and actions might have been
influenced by the fact that they had already stated second order beliefs. That was not the case in
the three treatments we are considering in this paper, since subjects were only asked to state theirsecond order beliefs (in A1 and 1A) after having stated their first order beliefs and played thegames (parts I and II), and did not know what the remaining part of their experimental session
was about until they had finished the earlier parts.
In treatment 1A subjects stated first order beliefs before they played the games. They firstread the instructions about how their choices of actions in the 14 games would be rewarded, thenthey read the instructions on stating first order beliefs and how they would be rewarded for theaccuracy of their statements, after which they stated their first order beliefs for all 14 games.
Next, they played the 14 games. Then they read instructions on stating second order beliefs, and12

At the end of their session, subjects were asked to fill out a brief exit questionnaire, in which they were asked togive their year of study and major and to describe how they chose actions and stated first and second order beliefs,
and given an opportunity to comment on the experiment.
13
A limitation of the analysis of our second-order belief statements is that we elicited point estimates of players’
second order beliefs, and not unrestricted probabilistic second order beliefs. Given this restriction, we cannot ruleout that a fully rational player’s stated first order belief is a best response to her own stated second order belief.
Point beliefs are typically assumed for the boundedly-rational models considered in the literature so far, but we
prefer to not assume them here, and therefore do not consider second order statements in our analysis.
The restriction to point belief statements was made to keep things simple. Some experimental researchers
believe that it is already very hard to get subjects to report “meaningful” probabilities. Imagine how hard would it beto ask subjects to report a probability distribution defined over the two-dimensional simplex. Researchers have tried
to elicit functions from subjects, but their behavior violates even the most basic restrictions. See Selten and Buchta(1999) for bid functions.
7stated them. Comparing treatments A1 and 1A allows us to test the hypothesis that subjects’ play
is not influenced by the fact that they have to state first order beliefs prior to playing the games.
Treatment 1A1A was very much like treatment 1A (with the exception that subjects were
not asked to state second order beliefs), but they were asked to proceed game by game, i.e., theystated their first order beliefs for each game and played it before moving to the next game. They
were not allowed to revisit their decisions for previous games. A comparison of the 1A1A and1A treatments allows us to test the hypothesis that subjects’ stated first order beliefs and actions
do not differ substantially when they perform one task at a time for all games, rather thancompleting all the tasks for each game before proceeding to the next game. This may make themmore aware of their relevant belief statements when they play the games. Comparing treatments
1A1A and A1 allows us to test the hypothesis that actions are not significantly different if firstorder beliefs are stated immediately before each game.14
In all sessions of all treatments subjects were randomly divided into subpopulations of Row
and Column players, as nearly equal in size as possible. During the experiments subjects wereanonymously and randomly paired, with generally different opponents for each game. However,they knew and they were explicitly told that in each game they were facing the same opponent
when playing the game and when stating their beliefs.
To ensure that subjects were motivated they were paid according to their decisions, as
follows. After the session, three numbers from 1 to 14 were selected at random with replacement.
One of the numbers indicated which of the 14 games each subject would be paid for, in
proportion to his payoff in that game at a rate of $0.15 per point. The other two random numbers
determined the games selected to reward the accuracy of each subject’s stated first and second
order beliefs, using a proper scoring rule (described below), with the range of monetary earnings
going from $0 to $10 for each of the tasks of belief elicitation.15

14

In the two treatments not considered in this paper, 21A and 21A21A, subjects stated second order beliefs before
proceeding to actions and first order belief statements. In treatment 21A subjects first read the instructions about
how their choices of actions in the 14 games would be rewarded, they read the instructions on stating first orderbeliefs, and then they read the instructions on stating second order beliefs. After reading all of these instructions theystated their second order beliefs for all games, then their first order beliefs for all 14 games, and finally they played
the 14 games. Treatment 21A21A was very much like treatment 21A but subjects proceeded game by game.
15
Subjects’ average earnings including show-up fees were $30.25, $31.52, $31.67, $30.81, and $29.13 for A1, 1A,
21A, 21A21A, and 1A1A subjects respectively. Their average earnings excluding show-up fees were $22.63,$24.31, $24.36, $23.39, and $16.33 for A1, 1A, 21A, 21A21A, and 1A1A subjects respectively. Their average
earnings for playing the games were $8.42, $9.07, $8.62, $8.31, and $9.51 for A1, 1A, 21A, 21A21A, and 1A1A
subjects respectively; their average earnings for their first order belief statements were $6.32, $6.95, $6.93, $6.20,
8

The results for the A1 and 1A pilot sessions were similar to the results for the corresponding
sessions that took place earlier. The experimental design was not changed as a function of theresults of the pilots.16
B. The Games
Table I summarizes the strategic structures of the 14 games. Also, the table presents
the action predictions of five boundedly rational models, each of which makes a unique purestrategy prediction in our games: Nash, Naïve L1, L2, D1, and Optimistic. The Naïve L1 model
predicts the action that is a best response against the uniform probability belief over the
opponent’s three actions. D1 predicts a best response against a belief that is uniform over the
opponent’s undominated actions only, and zero otherwise. L2 predicts a best response against
L1. Optimistic predicts the action that is part of the action profile leading to the player’s highest
possible payoff in the game. The models are taken from the existing literature on normal-form
experiments, along with three additional models that make different predictions depending on theunderlying parameters (see Section 5). All of them have proven to be at least partially successful
in predicting choice behavior in previous normal-form game experiments (Stahl and Wilson,
1994, 1995, McKelvey and Palfrey, 1995, Costa-Gomes, Crawford, and Broseta, 2001, Goereeand Holt, 2003, Weizsäcker, 2003). The models were used to select the 14 games, as we
attempted to separate their predictions of play as much as possible. For clarity in the table, we
use mnemonic names for players’ actions (Top - T, Middle - M, and Bottom - B or Left - L,
Middle - M, and Right - R) and present the games in an order that highlights the relationships
among them.17 Figure 1 displays the games.
As Table I shows, each of our games has a unique pure-strategy equilibrium, with ten ofthem being dominance-solvable. The games avoid the use of salient payoffs. Games #1, #3, #5,
and #7 are dominance solvable with two rounds of dominance for Row and three rounds for

and $6.30 for A1, 1A, 21A, 21A21A, and 1A1A subjects respectively; their average earnings for their second orderbelief statements were $7.40, $8.23, $8.25, and $8.31 for A1, 1A, 21A, and 21A21A subjects respectively;
16
However, this data was not included in our analysis for two reasons: since a priori we did not know if the pilot
sessions would lead us make design changes, we should not decide to use it ex-post to avoid biasing the results; and,the session sizes were too small to ensure that subjects were facing a different opponent in each game.
17
In the experiments the games were presented to each subject as Row player, with abstract decision labels, random
orderings of all games (8, 3, 10, 6, 14, 1, 12, 4, 7, 13, 5, 2, 9, and 11) and actions (e.g. the equilibrium outcome does
not correspond to the same combination of actions in more than 2 games).
9Column.18 Games #2, #4, #6, and #8 are dominance solvable with two rounds of dominance forColumn and three rounds for Row. These games are obtained from games #1, #3, #5, and #7 bytransposing players’ roles and changing all payoffs by –2, +2, +1, and –1 points respectively. We
call such mapping from one game to another an isomorphic transformation. One advantage ofusing pairs of isomorphic games is that we can use asymmetric games, but at the same time haveall subjects facing a set of games that is essentially identical across the two player roles without
them realizing so, as the payoff changes disguise their relationship. Game #9 is dominancesolvable with three rounds of dominance for Row and four rounds for Column. Game #10 which is isomorphic to game #9, after increasing all payoffs by 2 points -, is dominance solvablewith three rounds of dominance for Column and four rounds for Row. Games #11, #12, #13, and#14 each have a unique, pure-strategy equilibrium without dominance. Games #13 and #14 areisomorphic to games #11 and #12 after increasing all payoffs by +2, and –3 points respectively.19
After imposing the restrictions of dominance solvability, the games were jointly designed to givethe best chance to identify the best fitting model, among the set of models being considered.20
C. Eliciting Beliefs using a Proper Scoring RuleAs stated above, we used a proper scoring rule to elicit subjects’ belief statements. The rule
involves a quadratic loss function, defined as follows. Let subject i ’s stated belief in game g be

y gi , which can be any probability distribution over her opponent’s (subject j ’s) three actions L,
M, and R, i.e., y gi ≡ ( y gi , L , y gi , M , y gi , R ) , such that y gi ∈ ∆2 ≡ { y gi ∈ ℜ 3 | ∑c ={ L , M , R} y gi ,c = 1} . Define,
18

Henceforth, the number of rounds of iterated dominance is defined as the number of dominance relationships it
takes for the player in question to identify his own equilibrium action. Eliminating a dominated action is one round,eliminating a conditionally dominated action (taking into account that some action is dominated) is two rounds, etc.
19
It should now be transparent that dividing subjects into subpopulations of players (Rows and Columns in our case),and using isomorphic games allows us to account for effects of no-feedback learning, without randomizing the orderof the games across sessions. Some examples: while Game #8 was the first game Rows played, Columns played thecorresponding isomorphic game, Game #7, in 9th place; Rows played Game #10 in 3rd place, while Columns played
Game #10’s isomorphic game, Game #9, as their penultimate game. Thus, we can look for order effects bycomparing the decisions of the subpopulations of players across isomorphic games, like in Costa-Gomes, Crawford
and Broseta (2001).
20
Apart from separating the predictions for those models that make a pure-strategy prediction in our games (Nash,Naïve L1, L2, D1, Optimistic), we also attempted to select the games in order to achieve high discriminatory power
among the additional models, LE, ALE, and NI, which predict different behavior (mixtures between actions) only
for intermediate parameter values. This was done by considering several sets of parameter values for these models,and selecting the games such that for intermediate ranges of the parameter values (i) each of these models predicts
that in some games the probability mass is concentrated on one action, and in other games it is distributed roughly
equally (so the intermediate models can be better identified and separated from the pure models), and (ii) the threemodels have different predictions for comparable sets of parameter values, at least in one of the predicted choiceprobabilities. Both criteria could be satisfied only partially, however, as the three models are highly correlated.
10

subject j ’s chosen action as x gj ≡ ( x gj , L , x gj , M , x gj , R ) , where x gj ,r equals one for the chosen action
and zero otherwise.
The quadratic scoring rule then determines subject i ’s payoff from her belief statement
as v g ( y gi , x gj ) ≡ A − c[( y gi , L − x gj , L ) 2 + ( y gi , M − x gj , M ) 2 + ( y gi , R − x gj ,R ) 2 ]] , where A and c are constants,
in our case A = $10 and c = $5 .21 In Appendix B we show that given our design, this rule has theproperty that for risk neutral and money-maximizing players it is optimal to report the expectedvalue of their subjective probability distribution over the opponent’s actions.22
3. A First Analysis of the Stated Beliefs and Actions

This section conducts a first analysis of subjects’ stated beliefs and subjects’ actions,relying on simple summary statistics and non-parametric tests. Its goals are twofold: First, toprovide simple descriptions of our findings on (i) how well subjects’ stated beliefs and actions
conform to the game theoretic predictions, (ii) how accurate subjects’ stated first order beliefs
are, (iii) the level of consistency of each subject’s actions with her stated first order beliefs, (iv)the magnitude of subjects’ monetary losses, and (v) the effects that the different sequencing oftasks – treatment effects – may have on all the above. Second, to identify open questions thatneed further inquiry, and thereby prepare and lay the groundwork for the structural econometricanalysis of Sections 4 and 5.
We proceed as follows. In Section 3.A we test for differences in subjects’ actions as wellas subjects’ stated beliefs, across player roles in isomorphic games in each treatment, and acrosstreatments for each player role. This will answer numerous questions about order treatment
effects, and will inform us whether some of the data can be pooled if necessary. In Section 3.B
we consider subjects’ aggregate actions to study the rate of compliance with dominance, iterated
dominance, and equilibrium, as well as what averaged subjects’ stated beliefs say about how
often they expect their opponents to comply with dominance, iterated dominance, and21

See the slightly different, but equivalent, formulation in the instructions. We used a verbal description of thescoring rule, and gave numerical examples.
22
It is worth pointing out that this rule is not necessarily incentive compatible if subjects are rewarded for predicting
the action frequencies of a population of opponents (rather than a single opponent, as in our design). If the decisionmaker faces a finite number of possible opponents, the scoring rule is incentive compatible in the cases where her
subjective expectation corresponds to one of the outcomes that the aggregate choices of her opponents could
possibly generate, but it is not incentive compatible for all the possible beliefs that could be stated. For example, if asubject has 2 opponents, and they have three possible actions, the rule works if the subject’s expectation matches
one of the 6 empirical probability distributions over the three actions that could occur.
11

equilibrium. The section also reports on the predictive power of the boundedly rational models of
behavior that we used to design the games. Section 3.C documents the level of heterogeneity ofsubjects’ stated beliefs, their accuracy in predicting opponents’ actions, as well as other featuresthat belief statements exhibit. Section 3.C concludes by reporting the proportions of subjects’
actions that are best responses to their stated beliefs. I.e., this part of the analysis will contain theessential summary statistics about the consistency of actions with the stated beliefs. Finally,
Section 3.D measures the monetary losses associated with subjects’ actions and stated beliefs.
A. Pooling the Data

In this section we report tests for aggregate differences in subjects’ actions and for
aggregate differences in subjects’ stated beliefs, across treatments A1, 1A, and 1A1A, acrossplayer roles in isomorphic games within each treatment, across treatments after pooling the data
across isomorphic games within each treatment, and across player roles in isomorphic games
after pooling the data from the three treatments. We also report tests to investigate the possibility
that subjects’ responses, actions or stated beliefs, are random.
To deal with subjects’ actions we use Fisher’s exact probability test, which is appropriate
given that we are comparing categorical data from independent samples, and that we have nopresumption about how they differ. The tests are conducted separately for each game, poolingthe data of the two sessions in each treatment for all subjects in each player role, and for some
purposes pooling the data for subjects with isomorphic player roles in different games.
We compare the subjects’ aggregate actions in each of the 14 games between treatments
1A, A1, and 1A1A, by pairing the different treatments in all possible ways. 3 p-values are lessthan 5% (Column subjects’ actions in Games #10 and #12 in A1 versus 1A, and Row subjects’
actions in Game #5 in 1A versus 1A1A), well within the limits of chance for 84 comparisons.
We also find that within each treatment we cannot reject the hypothesis that Row and Column
subjects’ actions in isomorphic games are drawn from the same distribution, for most games. We
register 2 p-values (in A1 for Row subjects in Game #2 versus Column subjects in Game #1, andRow subjects in Game #14 versus Column subjects in Game #12) that are less than 5%, out of a
total of 42 comparisons. These results allow us to pool the data for subjects with isomorphic
player roles within each treatment, so as to compare subjects’ actions, across treatments 1A, A1,
and 1A1A, by once again pairing the different treatments in all possible ways. 3 p-values(subjects’ actions in Games #9 and #11 in A1 versus 1A, and in Game #11 in A1 versus 1A1A)

12

are less than 5%, out of a total of 42 comparisons, slightly more than the limits of chance for 42
comparisons. The results above also allow us to pool Column and Row subjects’ aggregate
actions across the three treatments, so as to compare subjects’ actions in isomorphic games. 1 pvalue (Row subjects’ actions in Game #2 versus Column subjects’ action in Game #1) is lessthan 5%, out of a total of 14 comparisons, only slightly more than the limits of chance.
Accordingly, we will sometimes pool the action data from A1, 1A, and 1A1A whenevernecessary to obtain adequate sample sizes, or for the purpose of producing figures that depict the
distributions of subjects’ actions.
In sum, the results of the reported Fisher tests suggest that the treatment effects on play
are minor. Regardless of whether the belief statements are solicited before or after the actions arechosen – and even in treatment 1A1A where beliefs are elicited immediately before each game –,we cannot reject the hypothesis that the actions follow a stable distribution. Furthermore, thetests involving isomorphic games show that subjects’ play of a game is independent of where in
the sequence the game appears, i.e., we do not detect any no-feedback learning.
We now use exact χ 2 tests (Pierce, 1970, chapter 11) to test the hypothesis that subjects’
actions were generated by uniform randomization over the possible actions. The tests are
conducted separately for each game, pooling the data of the two sessions in each treatment for all
subjects in each player role, and for some purposes pooling the data for subjects with isomorphic
player roles in different games.
In each treatment there are significant deviations from randomness for both Row and
Column subjects. The randomness hypothesis is rejected at a significance level of 5% in 48 outof the 84 tests. A more powerful test, after pooling the data across isomorphic games within eachtreatment, generates p-values less than 5% for 10, 11, and 11 games (out of 14) in treatments A1,
1A, and 1A1A, respectively. An even more powerful test, after pooling each player’s actions
across treatments, produces p-values less than 5% for 13 games for the Row subjects, and 12
games for the Column subjects. The most powerful test, with data pooled across isomorphic
games as well as across treatments, rejects randomness in all 14 games.
The next step is to test for differences between the subjects’ belief statements. Since
subjects’ stated beliefs are observations in a two-dimensional simplex, our tests should aim atcomparing the empirical distributions over the two-dimensional simplex. To simplify the
analysis we collapse subjects’ stated beliefs into four different categories that divides the two-13

dimensional simplex into four areas of equal size: for each of the three actions all the statedbeliefs that assign more than 0.5 probability to that action are assigned to the same category(therefore creating three categories), and the last category comprises all the beliefs that do not
assign more than 0.5 to any of the three actions. This allows us to use Fisher’s exact probability
test, which again is appropriate given that we are comparing categorical data from independent
samples, and that we have no presumption about how they differ.
Analogous to the above procedure, we compare aggregate stated beliefs in each of the 14
games between treatments 1A, A1, and 1A1A, by pairing the different treatments in all possible
ways. The 3 lowest p-values (Row subjects’ stated beliefs in Games #10 and #11 in A1 versus
1A1A, and Column subjects’ actions in Game #12 in 1A versus 1A1A) are around 6%, well
below the limits of chance for 84 comparisons. Within each treatment we again do not reject the
hypothesis that Row and Column subjects’ aggregate stated beliefs in isomorphic games are
drawn from the identical distributions, for most games. Of the 42 comparisons, 3 p-values areless than 5% (in 1A for Row subjects in Game #14 versus Column subjects in Game #12, and in
A1A1, for Row subjects in Games #11 and #12 versus Column subjects in Game #13, and #14,
respectively). We can therefore pool the data for subjects with isomorphic player roles withineach treatment, and compare subjects’ stated beliefs, game by game, across treatments. The
lowest p-value observed (out of 42) is larger than 5%, well below the limits of chance. We canalso pool Column and Row subjects’ aggregate stated beliefs across the three treatments, andcompare subjects’ stated beliefs in isomorphic games. 2 p-values (Row subjects in Games #6 and#14 versus Column subjects in Games #5 and #12, respectively) are less than 5%, out of a totalof 14 comparisons, a bit more than the limits of chance.
Generally, we observe very few significant rejections of the hypothesis that belief
statements follow a distribution that is stable across treatments, and only few more across playerroles in isomorphic games. With reference to this, we will sometimes pool the stated beliefs fromthe three treatments.
In testing the hypothesis that subjects’ stated beliefs were generated by uniform
randomization over the two-dimensional simplex, we follow the same procedure as above. We
collapse subjects’ stated beliefs into the same four categories, which allows us to use exact χ 2
tests.

14

Again, we find significant deviations from randomness for both Row and Column
subjects. At a significance level of 5%, the randomness hypothesis is rejected in 54 out of the 84
tests. After pooling the data across isomorphic games within each treatment, the tests generate pvalues less than 5% for 9, 11, and 9 games in treatments A1, 1A, and 1A1A, respectively.
Pooling each player’s actions across treatments produces p-values less than 5% for 14 games for
the Row subjects, and 12 games for the Column subjects. The most powerful test, using data
pooled across isomorphic games as well as across treatments, rejects randomness in 12 games.23
To summarize, the statistical tests reported above show subjects’ responses not to berandom, and moreover, suggest that treatment effects are limited, i.e. that the sequence in which
the two different tasks take place does not produce subjects’ responses that are statisticalsignificantly different, and that the position of the game in the sequence does not significantly
affect subjects’ responses, although minor effects are revealed for stated beliefs. The last finding
indicates that introspection during the experiment does not change players’ aggregate responses,
at least not their action choices. Of course, we cannot rule out that finer grids for grouping statedbeliefs and the collection of more data would reveal treatment effects, or more pronounced
position effects.
B. Compliance and Expectations about others’ Compliance with Game Theory

In this section we examine subjects’ actions and stated beliefs in the aggregate, forcompliance and others’ expected compliance with dominance, iterated dominance, andequilibrium predictions.
Since our games do not have dominant actions, we assess compliance with dominance bychecking how often subjects chose dominated actions in those games where they were available.
24

Each subject played 5 games that have a dominated action. The frequency with which suchactions were played was 12.5%, 11.9%, and 10.4% in treatments A1, 1A, and 1A1A,
respectively. Compliance with iterated dominance also shows a roughly stable pattern acrosstreatments. The 4 games that are dominance solvable in two rounds of iterated dominanceproduced compliance with the Nash Equilibrium prediction of 26.9%, 19.6%, and 27.7% in
23We also find significant deviations from randomness for both Row and Column subjects, as 82 out of 84 tests
produce p-values less than 5%. After pooling the data across isomorphic games within each treatment, we reject the
randomness hypothesis for all games for each of the treatments using a significance level of 5%. Pooling the data
across isomorphic games as well as across treatments, reject randomness in all 14 games, using significance levelsof 0.1%.
24
Ten of our fourteen games are dominance solvable, but initial dominance is only for one player role.
15

treatments A1, 1A, and 1A1A. The 5 games that were dominance solvable in three rounds ofiterated dominance (the games in which the player has a dominated action) had a compliancewith Nash of 40.5%, 42.9%, and 44.3% in treatments A1, 1A, and 1A1A. In the only game with
4 rounds of iterated dominance, the compliance rate was 45.0%, 47.6%, and 39.1% in treatments
A1, 1A, and 1A1A. Finally, the 4 non-dominance solvable games registered equilibrium play in
32.5%, 29.2%, and 40.2% in treatments A1, 1A, and 1A1A. While the choice frequencies are
relatively stable across treatments, there does not seem to be a clear relationship between thenumber of steps that is needed to solve for the equilibrium, and the frequency with which theequilibrium actions were chosen. Overall compliance with equilibrium across games is 35.8%,
32.6%, and 37.9% in treatments A1, 1A, and 1A1A.
Stated beliefs can be used to assess how strongly players expect their opponents tocomply with theory’s predictions. The subjects state beliefs in 5 games for which their opponents
have a dominated action. The frequencies with which players expect their opponents to play suchactions are 15%, 15.9%, and 16.7% in treatments A1, 1A, and 1A1A, respectively. 36.5%,
21.9%, and 35.2% of the stated beliefs in treatments A1, 1A, and 1A1A assign probability zeroto the dominated action being played. Hence, subjects expect their opponents to comply withdominance less often than their opponents do.
A possible explanation is risk aversion, since the quadratic scoring rule punishes large
mispredictions, which subjects can avoid by making roughly uniform belief statements. We
observe, however, only very few belief statements that minimize risk, by assigning equal
probabilities to the opponent’s actions: 5.5%, 6.4%, and 1.6% in treatments A1, 1A, and 1A1A,
respectively (here, we consider as “equal-probability” beliefs all the beliefs that assign no lessthan 0.30, and no more than 0.35 probability to all three of the opponent’s actions). As acomparison, the frequency of stated beliefs that are degenerate (assign probability one to one of
the actions) was 13.2%, 9.9%, and 15.4% in treatments A1, 1A, and 1A1A. The frequency ofstated beliefs that assign zero probability to at least one of the opponent’s actions was 38.9%,
24.7%, and 38.7% in treatments A1, 1A, and 1A1A.25 Hence, a player is much more likely tostate a belief that assigns zero probability to at least one of the opponent’s actions than she is tostate an approximately equal probability belief.

2565%, 56%, and 65% (91%, 87%, and 93%) of the stated beliefs in treatments A1, 1A, and 1A1A assign
probabilities to the different actions that are multiples of 0.10 (0.05).
16

Next, we examine whether subjects expect their opponents to play equilibrium actions. In
the 4 games that are dominance solvable in two rounds of iterated dominance, subjects on
average expect their opponents to play the equilibrium action 20.9%, 26.9%, and 25.3% of thetime in treatments A1, 1A, and 1A1A. In the 5 games that require three rounds of iterated
dominance subjects, on average, expect their opponents to play the equilibrium action withfrequencies of 38.5%, 36.3%, and 39.2% in treatments A1, 1A, and 1A1A. In the only game with
4 rounds of iterated dominance, subjects, on average, expect their opponents to play theequilibrium action 25.1%, 27.8%, and 33.1% of the time in treatments A1, 1A, and 1A1A.
Finally, in the 4 non-dominance solvable games, subjects’ average expectation about theiropponents play of the equilibrium action was 31.2%, 33.1%, and 36.9%, in treatments A1, 1A,
and 1A1A. Across all games, subjects expect their opponents to play their equilibrium action
30.0%, 32.1%, and 34.1% of the time in treatments A1, 1A, and 1A1A. However, they very
rarely (2.9%, 3.7%, and 3.9% in treatments A1, 1A, and 1A1A) expect their opponents to playtheir part of the equilibrium outcome with probability one. These percentages are roughly thesame regardless of how easy or hard it is to solve for equilibrium by iterated elimination of
dominated strategies. While the average beliefs are relatively stable across treatments, we again
cannot identify a clear relationship between the number of steps required to find the game’s
equilibrium, and the frequency with which they expect their opponents to play the equilibrium
action. Generally, the stated expectations about equilibrium play are fairly close to the actual
frequencies, which will be discussed in more detail in the following subsection.
We also note that the frequency of subjects who expect their opponents to choose anaction at random (stating beliefs with all likelihoods between 0.30 and 0.35) tends to go up
slightly as the number of rounds required to solve the game increases or if the game is nondominance solvable. This points to a higher perceived complexity of these games. In treatment
A1, the frequency of such stated beliefs is 6.9%, 6.0%, 10% and 16.9% for games that require
the player’s opponent to perform 2, 3, 4 rounds of iterated dominance, and that are nondominance solvable, respectively. The corresponding frequencies for the treatments 1A and1A1A are 14.9%, 13.8%, 14.3% and 16.1%, and 6.0%, 7.0%, 8.7%, and 13.6%.
Similarly to the above discussion of compliance with Nash, we can look at the predictive
value of the boundedly rational models that were used to design the experiment. Table IIcontains the aggregate compliance with the predictions of each of the five models that were17

listed in Table I, pooled across the three treatments. The table shows that on average over the 14
games, the Naïve L1 model (best responding to a uniform probability belief over the opponent’s
three actions) describes the action data best, among the five models. In 59.8% of the cases,
subjects choose the action predicted by this model. Furthermore, in only one of the 14 games(Row Player’s Game #10, which is isomorphic to Column Player’s Game #9) was the L1 action
not chosen most often. The second-highest hit rate is achieved by the D1 model (49.5%), whichassumes that players disregard the opponent’s dominated action (if there is one) and play a best
response against the uniform distribution over the remaining actions. In games where the twomodels make different predictions, L1 outperforms D1 clearly, correctly predicting the choice in
51.4%, as compared to 22.6% that are predicted by D1.
The aggregate stated beliefs according to model predictions are listed in Table III. The
table contains the average probability mass with which subjects estimate each of the models’
predictions to be chosen by the opponent. Inspection of the table shows that average belief
statements follow the same pattern as the empirical action frequencies, but with a tendency
towards the uniform distribution. Among the five types it is most often predicted that the
opponent would choose the L1 action (49.1%), followed by D1 (41.7%).26
According to these aggregate numbers, the overall pattern of choices and stated beliefs
points at a particular inconsistency, described in the introduction: Subjects do not take theiropponents’ incentives into account when they play the games, and hence they choose the L1
action most often. When asked to state their expectations about the opponent, they tend tocorrectly predict this pattern. In games where the L1 action is different from the best response to
the opponent’s L1 action, this behavior is inconsistent, because the subjects would on average bebetter off if they gave a best response to their own stated beliefs, instead of playing naïvely.
Notice, however, that this is only suggestive evidence about the inconsistency of behavior
in the two tasks. This is because our restriction of attention to five specific models of behavior
has different implications in the two tasks, in terms of the underlying beliefs that subjects areallowed to hold about their opponent. For example, in Table III we report what proportion ofbelief statements could be generated by players who expect their opponents to be L2 players.
Hence, we allow for the existence of players with an additional step of reasoning (L3) when we
26

A similar pattern of misprediction – regression of belief statements towards the uniform belief – is discussed in
Huck and Weizsäcker (2002). For a related experiment on predictions about others’ risk attitudes see Hsee andWeber (1997).
18

consider the belief statements, but not so when we consider the action data, in Table II. We
therefore compare two sets of behavioral models that are different from each other. Hence, theresult that actions and belief statements often contradict each other will also need to be discussed
in a more consistent framework. Section 4 attempts exactly that, by relaxing the model-specificrestrictions on underlying beliefs, and testing the assumption that actions and belief statements
are generated by the same expectation about the opponent.
An alternative approach to measuring consistency is to hold the set of behavioral models
constant across the two tasks, and ask whether both data sets suggest the same distribution ofunderlying beliefs, measured in terms of consistency with the different models. This is possible
with the present set of behavioral models, since each of them relies on assuming a specific belief
about the opponent’s action distribution. We can therefore count how often the subjects’ statedbeliefs coincide with these type-specific beliefs. Table IV lists the proportions of subjects’ statedbeliefs that lie within the immediate neighborhood of each model’s underlying belief (within an
equilateral triangle with sides of length 0.05), which can be compared directly with Table II.
However, it is evident that the observed frequencies of belief statements that lie in theneighborhood of the prescribed beliefs are far too small, so we can learn very little from thiscomparison. We refer the reader to Section 5, where an analogous comparison is made within aprobabilistic choice model that accounts for noise in the belief statements, and is thereby able touse all data when weighing the evidence in favor of the different behavioral models. There, theL2 model outperforms the other four models in predicting the belief statements. Since L2 beliefs
correspond to the prediction that the opponent chooses L1 actions, this result is consistent withthe above observations.
C. Assessing the Accuracy of Stated Beliefs and its Consistency with Actions

Here we analyze further how accurate subjects are at predicting their opponents’ play,and combine this with the question of how often subjects play best responses to their own statedbeliefs. We start by pooling the data (actions as well as stated beliefs) across treatments, but
separately for each game and player role. To give the reader a visual summary of how wellsubjects’ beliefs match their opponents’ actions, we plot the frequency with which each action isplayed in each game by the subjects in each role, as well as the average of their opponents’ statedbeliefs. Figures 2A (for Row subjects) and 2B (for Column subjects) are a visual representation19

of this information (the numbers next to the dots indicate the Game number).27 As an illustrationconsider Game #9. Row subjects in this game played Top, Middle, and Bottom, with frequencies
equal to 0.758, 0.240, and 0.000. In contrast, the averaged stated belief by column subjects
predicted that those actions would have been played with probabilities equal to 0.570, 0.356, and0.074. Averaged beliefs overestimate the frequency with which Row’s dominated action Bottom
is played. Looking at Game #10, Game #9’s isomorphic game, we can see (Figure 2B) that
Column subjects played Left, Middle, and Right with frequencies equal to 0.678, 0.306, and
0.016, while row subjects’ averaged stated belief predicts such actions would be played withfrequencies equal to 0.561, 0.309, and 0.130, once again overestimating the frequency withwhich the dominated action is played.
Taking into account all 14 games, we again observe that the empirical distributions ofsubjects’ actions tend to be further away from the equal probability distribution than subjects’
averaged stated beliefs. While the average of the individual games’ mean squared deviations
from the equal probability distribution (defined as the sum of the squared difference between
each action frequency and 1/3) is 0.17 and 0.13 for Row and Column subjects, the corresponding
statistics for the averaged stated beliefs are 0.06, and 0.07.
The aggregate data displayed in Figures 2A and 2B reveal little about heterogeneity, i.e.
whether stated beliefs are strongly concentrated around the average, or whether there are widelydispersed. In general, the level of dispersion is high. This can be seen in Figures 3A and 3B,
which display the stated first order beliefs in Game #9 and the isomorphic Game #10 of Column
and Row subjects, respectively. The numbers that appear next to a dot indicate the number ofobservations of that statement (e.g., in Game #9, three Column subjects stated their own
opponent would play Top, Middle, and Bottom with probabilities equal to 0.7, 0.2, and 0.1).
Computation of mean squared deviations gives a measure of dispersion (see the two left columnsof Table V) in all games (ranging from 0.16 – Column subjects in Game #6 – to 0.54 – Row
subjects in Game #1), with some difference across games, but smaller differences across playerroles for isomorphic games. The average mean squared deviations are 0.32 and 0.33 for Row and
Column subjects’ stated beliefs. Random beliefs would generate mean squared deviations equal
to 0.34.

27

Figures 2C and 2D, 2E and 2F, 2G and 2H do the same for treatments A1, 1A, and 1A1A, respectively.
20

It is obvious that heterogeneity implies that at least some of the subjects mispredict theaggregate action frequencies of their opponents. The mean squared errors between subjects’predictions and their opponents’ action frequencies (see the two middle columns of Table V)
range from 0.11 (Column subjects in Game #6) to 0.36 (Column subjects in Game #3). Acrossgames the average mean squared error is 0.20, and 0.26 for row and column subjects,
respectively. Random beliefs would have produced mean squared errors equal to 0.49, and 0.48.
Thus, despite being as dispersed as random beliefs, across games the stated beliefs tend to bemuch closer to the actions’ empirical frequencies than random beliefs.
To gain a better understanding of the nature of the mispredictions, we use additional
measures of statistical accuracy. First, we consider an overall measure of statistical accuracy, the“probability score” (e.g., Brier, 1950, Yates, 1990), which is the sum of the squared deviations
between each component of the stated belief vector and one or zero (if the subject’s opponent
played, or did not play the action that corresponds to that component) divided by the number ofobservations.28 This measure is identical to the mean squared deviation discussed above, exceptthat here each subject’s opponent’s chosen action replaces the frequencies of subjects’
opponents’ actions. In other words, we measure the accuracy of beliefs by looking at individual
matches, rather than considering how well subjects predict their opponents’ aggregate play.
Formally, and using the notation introduced in Section 2.C, we write the average probabilityNscore in game g as APS g = 1 ∑ ( y gi − xgi )( y gi − xgi )' , where N denotes the number of times game g
N i =1

was played across all subjects, y gi is a subject’s stated belief vector, and xgi is her opponent’s
chosen action vector. The APS’s theoretical range is the interval [0,2] , and the equal probability
belief generates a score equal to 0.67, regardless of which action is chosen.
Before we compute the APSs, we first assign subjects’ stated beliefs to a finite number
T of subcollections of beliefs, as we will need to do for other calculations further below. We

round belief statements up or down to the nearest increment of 0.10 in each component of the28

In the experimental literature on games, the probability score and other measures associated with it have been usedby Feltovich (2000) to assess the accuracy of the predictions generated by different learning models. Camerer, Ho,Chong and Weigelt, (2002) do the same, and additionally analyze the accuracy of subjects’ stated beliefs on repeatedtrust games, finding that subjects’ forecasts are very well calibrated, if they are given an opportunity to learn. Our
work focuses on single-shot play of a series of games, where there is no opportunity to learn, and where subjects canchoose one out of three actions rather than two.
21

stated belief vector that is not a multiple of 0.10, such that the vector still represents a probability
distribution.29
The APS across games is reported in the last two columns of Table V. Observed values
range from 0.342 (Rows in Game #4) to 1.006 (Rows in Game #5). No major differences areobserved across player roles for isomorphic games. The APS-across-games-mean is 0.747 forRows, and 0.743 for Columns. While these results show that individual subjects often fail topredict the actions chosen by their own opponent, they do not say much about some features ofinterest that stated beliefs might exhibit. In particular, do stated beliefs discriminate among (orcapture) instances in which particular actions are played with greater frequency? What is thedegree of correspondence (calibration) between the probabilities that the stated beliefs assign tothe different actions and the observed empirical frequencies of play?
It is well known that professional forecasters, e.g. weather forecasters (Murphy and
Winkler, 1977), professional sports oddsmakers (Yates and Curley, 1985) tend to exhibit goodcalibration, certainly as a result of years of on-the-job learning, and perhaps as a result of jobrelated incentives. However, “well-calibrated forecasters” sometimes exhibit low discrimination(e.g. professional sports oddsmakers, see Yates and Curley, 1985). On the other hand, classroom
subjects’ probability judgments in experiments without monetary incentives are in general not
calibrated (Lichtenstein, Fischhoff, and Phillips 1982), perhaps also due to limited experience orrepetition of the forecasting task. We can use our experimental data to examine if subjects’ statedbeliefs are calibrated and if they discriminate their opponents’ choice problems, in anenvironment with monetary incentives and no feedback.
To measure calibration and discrimination, we pool the data across games, in order tocreate a data set with different exogenous events that the subjects are asked to predict.30 Before
pooling the data we identify three kinds of actions for each game: the equilibrium action(referred to as L' ), the one that is either dominated or that yields the lowest expected payoff

29This rounding is vacuous for the majority of the stated beliefs. See fn. 24.
Separately, we also measure discrimination and calibration for the set of games in which the player’s opponent has
a dominated action, the four non-dominance solvable games, and the remaining games (see Table VI).

30

22

against a uniform prior ( M ' ),31 and the remaining action ( R' ). Predictions of the same kinds ofaction are pooled across games.32
Calibration and discrimination are related to the APS, as demonstrated by Murphy(1973). The APS in game g can be written as:
APS g = x g (u − x g )'+1 T
1 T
nt ( y t − x g ,t )( y t − x g ,t )'− ∑ nt (x g ,t − x g )( x g ,t − x g )' ,∑N t =1
N t =1

where u is the unity vector, x g is the actions-frequency of play vector across all stated beliefs,
x g = ( x g ,L ' , x g , M ' , x g , R ' ) , with xg ,c =1 N j for allc ∈ {L' , M ' , R '} , nt is the number of times that∑ xg ,c
N j =1

subcollection t ’s belief was stated, y t is subcollection t ’s belief vector about the likelihood ofplay of the different actions by one’s opponent, and x g ,t is the actions-frequency vector for thosecases where subjects state beliefs in subcollection t , i.e. x g ,t = ( x g , L ',t , x g , M ',t , x g , R ',t ) , withx g ,c ,t =1 nt j for allc ∈ {L ' , M ' , R ' } .
∑ x g ,cnt j =1

The first term is a function of the relative frequency of play of the different actions, andthus it is outside the control of the subjects stating beliefs. It is a measure of uncertainty of play.
The larger this term, the greater the APS. In our case, it can assume values between 0 (only one
action is ever chosen) and 2 / 3 (the three actions are played with equal probability).
The second term is the weighted average of the squared difference between a stated belief
and the frequency of play of the different actions for all pairings in which that belief was stated.
It is a measure of calibration. For example, across all pairings in which subjects stated that theiropponents would play the different actions with probabilities equal to 0.10, 0.40, and 0.50, goodcalibration means that the empirical frequency of play matches these probabilities. The range ofthis term is the closed interval [0,2] . Perfect calibration is achieved by stating the empiricalfrequency of play of the different actions. The smaller this term is, the greater the calibration,and the smaller the APS.

31

In the five games where this action is also the equilibrium one, M’ corresponds to the action that yields the second
lowest expected payoff against a uniform prior.
32
We could have stuck with T, M, and B as the three categories of actions, but for the sake of interpreting themeasures of discrimination and calibration, it is preferable to associate behavioral assumptions with one of the threepossible actions.
23

The third term measures discrimination, which reflects the extent to which subjects sortthe events into subcategories for which the frequency of actions differs from the overall
empirical frequency of the different actions. In our case, this term can take values in the interval[0,2 / 3] . The smaller this term, the smaller the discrimination and the greater the APS. If thestated beliefs are all equal (e.g., equal to the empirical frequency of play), discrimination is nonexistent. This helps to illustrate why perfect calibration does not imply good discrimination.33
The results of the exercise are reported in the last row of Table VI. Both the observed
levels of calibration and discrimination in our data are relatively poor, compared to thoseobserved elsewhere (Camerer, Ho, Chong, and Weigelt, 2002). We conclude that either ourmonetary incentives were not strong enough, or that monetary incentives alone are not the key togood calibration and discrimination, in the absence of opportunities to learn. Since higher stakes
seldom induce strong behavioral change in laboratory experiments, the missing learning
opportunities may be the more likely explanation.
We now turn to the question of to what extent subjects’ stated beliefs and actions are
consistent with each other at the individual level, in the sense that actions are best replies to thesame subjects’ stated beliefs. Figures 4A and 4B display the empirical absolute frequency
distribution and the cumulative empirical distribution of the number of subjects for which theiractions are best responses to their own stated beliefs, for a number of games from 0 up to 14 foreach of the three treatments. On average, subjects choose actions that are best responses to theirstated beliefs in 7.08, 7.36, and 8.41 games, in treatments A1, 1A, and 1A1A. Most subjects
choose actions that are best responses to their stated beliefs for a number of games between 4
and 10 in all treatments. The figures also show that subjects best respond more often to theirstated beliefs than they would if choosing actions randomly. Kolmogorov-Smirnov tests
comparing the empirical CDFs of each of the three treatments to the CDF implied by random
behavior produce p-values lower than 1E-8 for any of the three treatments (1.1E-9, 1.5E-10,
5.8E-15 in A1, 1A, and 1A1A). However, frequencies of best responding to stated beliefs do notdiffer significantly across treatments. Exact two-sample Kolmogorov-Smirnov tests, pairing thethree treatments in all possible ways, yield no p-value less than 5%.
We find no evidence that the best response rate changes strongly with the nature of thestated beliefs. In particular, one might suspect that those subjects who expect their opponents to33

Alternative decompositions of the APS have been proposed by Yates (1982), and others.
24chose a particular action with a high likelihood would best respond to their belief statement more
often than others.34 However, in those instances where a subject stated the belief that the
opponent would choose one of the three actions with likelihood 0.85 or higher, the same subject
on average chooses a best response action in 52% of the cases, i.e. even less than the average of
55%. In cases where subjects attribute at least 0.5 of the probability mass to one of the
opponent’s actions, they best respond to their stated belief 51% of the time.
While the frequencies of inconsistent pairs of (action, belief statement) responses aresubstantial, notice again that we have not accounted for noise in the subjects’ decision-making
processes, either when they choose their actions or when they state their beliefs. The observed
inconsistencies may be statistically insignificant, once the noise is appropriately taken into
account. The structural approach in Sections 4 will show that that when this is done mostdeviations are indeed significant.
D. Measuring Subjects’ Monetary Losses

How much did it cost subjects that their actions and stated beliefs were not consistent
with each other? We try to address this issue by assuming that subjects’ stated beliefs were
subjects’ “true” underlying beliefs, and by determining the corresponding subjectively expected
monetary losses that would come about as a consequence of their action choices, instead of the
one that was the best response to their stated beliefs.35 One can immediately see that, for eachsubject and in each game, these losses have an upper bound that is a function of the belief thatthe subject stated, and of the set of possible payoffs in that game. This is so because the subject’s
stated belief and the game’s payoffs determine the action that would have been the best responseto those beliefs, and its corresponding expected payoff. Likewise, the subject’s stated belief andthe game’s payoffs determine the expected payoff for the worst possible action, and the expected
payoff that it yields. The difference between these expected payoffs determines the amount that a
subject could potentially lose by not choosing the action that is the best response to his statedbeliefs. Remember from section 3.C above, that subjects often chose actions that were best
responses to their stated beliefs, in which case the losses are zero.

34

Due to the monetary incentives, subjects should best respond more often if the relative payoff increases are higher
from doing so, and not depending on whether the belief is extreme. However, one could expect that subjects withextreme beliefs have a ‘clearer’ view of the opponent’s decision problem, and take it into account more.
35
Measuring subjects’ monetary losses is now standard in the literature. See, for example Fudenberg and Levine(1997).
25

Each game is worth an expected value of $15/14=$1.0714, given that subjects wererewarded for one out of the 14 games played. Therefore the expected value per game point isworth $0.0107. If we pool the action data across treatments, but not across isomorphic games, so
as to distinguish player roles, we find that Row subjects lost an average of $0.06 per game(loosing only $0.03 in Game 6, and $0.10 in Game 3), and Column subjects lost an average of$0.07 per game ($0.04 in Game 5 and $0.10 in Game 6). Summing over the 14 games, theaverage loss per subject was $0.88 for Row subjects, and $0.99 for Column subjects. But how
much could they potentially loose by choosing an action that had an expected payoff as small as
possible given their stated beliefs? We find that the average maximum feasible loss per game
would have been $0.31 for Row subjects (on Game 2 loosing only $0.16, and in Game 3 loosing
as much $0.47) and $0.32 for Column subjects per game (on Game 1 loosing only $0.16, and on
Game 4 loosing as much as $0.55). Therefore by choosing an action that was not a best responseto their stated beliefs Row subjects could have lost $4.34, and Column subjects could have lost
$4.51. By dividing the amount that would be lost due to inconsistent actions and stated beliefs by
the maximum amount they could have lost, we see that on average Row subjects lost 22% of the
maximum losses they could make, and Column subjects lost 24%.
4. A Statistical Model of Stated Beliefs and Actions

In this section we conduct a maximum-likelihood analysis of subjects’ actions and statedbeliefs in order to estimate players’ underlying beliefs about their opponents’ actions. Our
analysis uses subjects’ actions and stated beliefs simultaneously in order to assess the evidence infavor of a particular belief about the opponents. Combining the two data sets, we can test
whether they could not have been plausibly be driven by the same set of underlying beliefs.
Our model is based on the observation that when subjects choose actions, i.e., whenplaying the games, and when stating beliefs, they, in both instances, make decisions in responseto the monetary incentives they face, and given their beliefs about their opponents’ actions. We
use the notation first introduced in Section 2.C, where player i is the Row player, and player j is
the Column player. Let x gi ∈ {T , M , B} denote a generic action for the Row player in game g ,and u g denote the Row player’s matrix of payoffs in the 3 x3 game g . Denote by u g ( x gi , bg )26

player i ’s expected payoff when choosing action x gi against player j ’s (possibly mixed)~~
strategy bg , where bg ∈ ∆2 ≡ {bg ∈ ℜ 3 | ∑c ={ L,M , R} bg ,c = 1} .

We assume that when choosing her action in game g , player i holds a first order belief
bga ∈ ∆2 , and that her action is a probabilistic payoff-maximizing response to this belief,

following a logistic distribution with a precision parameter λa ≥ 0 . I.e., player i chooses action

x gi with probabilityr (x ,b , λ ) ≡
a
g

i
g

a
g

a

∑

exp(λa u g ( x gi , bga ))exp(λa u g ( x' , bga ))x '∈{T , M , B}.

(1)

The parameter λa governs the response precision of the players’ actions, in that a higher level of

λa corresponds to a higher probability of choosing actions with a relatively large expected
payoff. As λa → ∞ , the action with the highest expected payoff is chosen with probability equal
to one, if it is the unique payoff-maximizing action. As λa → 0 , actions are chosen randomly,
and each action is played with probability equal to 1 / 3 . For any given level of λa , the ratio of
two distinct actions’ choice probabilities depends only on the actions’ expected payoff
difference. If all experimental subjects have the same underlying belief (which will be relaxed
below), the log likelihood of observing the N action choices in game g isN

L(bga , λa | x g ) = ∑ ln rga ( x gi , bga , λa )

(2)

i =1

Notice that the underlying belief bga is unrestricted here, except that it has to be in ∆2 . This
makes the model very flexible, and it can be viewed as a straightforward generalization of a large
number of existing belief-based models (e.g. those estimated in Section 5). When we turn to thedata, bga will be estimated jointly with λa .
Before that, we consider the model of how players’ belief statements are generated. As in
Section 2, let y gi denote a generic first order belief statement for player i in game g . Player i ’s
expected payoff from stating belief y gi , given that her opponent plays a mixed action profile b g ,is denoted as v g ( y gi , bg ) . Using the quadratic scoring rule that is described in Section 2.C, it
holds for any y gi and b g that27

v g ( y gi , b g ) = A − c[b g , L [( y gi , L − 1) 2 + ( y gi , M ) 2 + ( y gi , R ) 2 ]] −c[b g , M [( y gi , L ) 2 + ( y gi , M − 1) 2 + ( y gi , R ) 2 ]] − c[b g , R [( y gi , L ) 2 + ( y gi , M ) 2 + ( y gi , R − 1) 2 )]. (3)For the generation of belief statements, just as in the case of action choices, we assume that
player i holds an unobservable first order belief bgbs ∈ ∆2 , and states a belief that is a
probabilistic payoff-maximizing response, following a logistic distribution with a precisionparameter λbs ≥ 0 . That is, player i draws her belief statement from a distribution over ∆2 , sothat the density of stating belief y gi , given her latent underlying belief bgbs , is equal to:r (y ,b ,λ ) ≡
bs
g

i
g

bs
g

bs

exp(λbs v g ( y gi , bgbs ))

(4)

bs
bs
∫ exp(λ v g (s g , bg ))ds g

s g ∈∆2

A density function, instead of a probability distribution function, is specified because acontinuum of possible belief statements is possible.36 As is true for the precision parameter λa ,the parameter λbs corresponds to the choice precision associated with the belief statement. Dueto the fact that the quadratic scoring rule is incentive compatible, the density rgbs achieves amaximum where y gi is equal to the underlying belief bgbs , for any given λbs . I.e., “truth-telling”
has the highest likelihood. As λbs approaches ∞ , the stated beliefs with strictly positive density
become arbitrarily close to the underlying belief. If λbs → 0 , a uniform density over the twodimensional simplex is induced. But for any strictly positive level of λbs , the observed belief
statement contains some information about the underlying belief, and hence an appropriate
statistic can be compared to the estimated underlying belief that appears to have driven the action
choices of the subjects. Taking logarithms of expression (4) and summing over all subjects yields
the log-likelihood of observing the belief statement vector in a given game, y g :NL(bgbs , λbs | y g ) = ∑ lnrgbs ( y gi , bgbs , λbs ).

(5)

i =1

To account for heterogeneity among our subjects, we generalize this to a mixture model,
in which each subject’s type is drawn from a common prior distribution over types. Subjects canbe one of several types, and each type may have a different underlying belief about the36

In our experiment subjects were allowed to enter beliefs that could discriminate probabilities as small as 0.001.
28

opponent’s play.37 Of course, the homogenous case is automatically included as the special casewith one type of players. Index the types k = 1,..., K , let bgbs ≡ (bgbs ,1 ,..., bgbs , K ) denote the Ktypes’ first order beliefs in game g , and let p ≡ ( p 1 ,..., p K ) denote the subjects’ common priorK

type probabilities, with ∑ p k = 1. Assuming that errors are i.i.d. across subjects, we weight (4)k =1

by the elements of p , sum over k , take logarithms, and sum over i to obtain the log-likelihood
function of observing game g ’s belief statement sample y g = ( y 1g ,..., y gN ) :N
K
L(bgbs , p, λbs | y g ) = ∑ ln ∑ p k rgbs ( y gi , bgbs ,k , λbs )
i =1
 k =1
(6)

The model of action choice determination above (yielding expression (2)) could in theory
likewise be generalized to include K types of possible beliefs. However, it can be shown that fora mixture model like ours, we can identify at most two different types of players when players
only have three actions to choose from. Furthermore, in our sample even the model with two
types does not improve the fit, compared to the single-type model, where subject homogeneity is
assumed. Therefore, we will restrict the estimations to allow only one type when actions arechosen. A more detailed discussion of this simplification is given in Appendix B.38
The above likelihood functions allow a formulation of the main null hypothesis of
consistency between the two tasks, in terms of the underlying beliefs: We test whether the
average underlying belief about the opponent’s play is identical under both tasks, in game g .
K

H 0 : bga = ∑ p k bgbs ,k

(7)

k =1

To test (7), we maximize the log-likelihoods given in (2) and (6) separately for the data
for each game, and conduct likelihood ratio tests of the restriction (7). Notice that there are two
possible interpretations for this test: First, the literal interpretation, testing whether theunderlying belief is constant across the two tasks (on average over types). Second, notice that37

In contrast, we maintain the assumption that the precision parameters are identical for all types. This simplification
is made for reasons of computational complexity, but thereby we also avoid the possibility that some types haveextremely high response precisions, and therefore only explain very specific sets of observations (peaks).
38
There, it is shown that any probability distribution over the three actions {T,M,B} that can be generated by a Ktypes mixture-model can also be generated by a 2-types mixture-model. Hence, having more than two types does not
improve the fit of the model. But in our sample, the two-types model does not outperform the single-type model. In
other words, the best-fitting distribution generated by two types can also be generated by one single type. Generally,

29

one may not be willing to accept that decision-makers can have different beliefs about the same
set of events, between the two tasks. Rejecting the null hypothesis would then indicate that the
mapping from beliefs into decisions differs from the way it is hypothesized in the model
assumptions. Hence, according to this interpretation, it is a test of the hypothesis that decisions
are governed by beliefs.
Of course, even under the second interpretation, a rejection would leave open thequestion whether the mapping from beliefs into belief statements is flawed, or the mapping frombeliefs into actions, or both. This illustrates the importance of formulating a well-fitting (andsufficiently general) statistical model of belief statements, even if the ultimate interest lies in thedetermination of actions. Only if the belief statement data appear to be generated by underlying
beliefs can we argue that the action data may not be generated by underlying beliefs. It isnoteworthy in this context that the belief statements are fairly close to the opponent’s empiricalaction distributions (see Section 3), indicating that the belief statements are indeed the result of athought process about the opponent. Regardless of the interpretation, it is clear that a rejection of(7) suggests that the two data sets are inconsistent, and that belief statements contain insufficient
information to explain actions.
We now turn to the data. Table VII reports the estimation results for the action data only.
It contains parameter estimates of the single-type model for all games, pooling the data acrossthree treatments.39 In the table, estimated precision parameters are reported as the first number ineach column, and the belief estimates are included below that. The obtained value of the log
likelihood is reported as the last number in each column. For this and all subsequent tables, thedata were pooled across isomorphic player roles. The estimation results show a considerable
variation across games, in the estimated precision parameter λa as well as in the log likelihood
values that are obtained at the maximum. (Compare, e.g., Games #5 and #12.)
Next, we estimate the model of belief statement generation, using the data from the belief
statement task. There, the introduction of multiple types (in the form of the mixture model
described above) does indeed significantly improve the fit in the data. The question arises what
it should not come as a surprise that one can not estimate more than three parameters from an observed distribution
over three actions.
39
We also conducted the estimations separately for each of the treatments, as well as for all combinations oftreatments. This allows us to investigate order effects, similar to the nonparametric tests reported in Section 3. Noneof the 42 comparisons of actions in a single game between two treatments yielded a rejection at 5% significance, of30

number of types K we should include in the model. Somewhat arbitrarily, we report in Table VIII
the results for K = 4 types, noting that the Schwartz (or Bayesian) Information Criterion selects

K = 4 for six out of the 14 games, and that for five additional games it selects either K = 3 orK = 5 . We also ran all estimations and tests for the range K ∈ {1,...,6} , to be able to check

whether the obtained results might only hold for a specific number of types in the distributions.
(They do not, as will be outlined below.) For a comparison, the table also includes the average
belief statements of the subjects, in the last two rows.
Again, we see that the estimated values of the precision parameter, λbs , varies
considerably across games. Comparing the average estimated beliefs with the average statedbeliefs shows that the estimated beliefs are very close to the average statements. Only in one outof the 14 games (#2) does one of the two estimated average estimated belief parameters differ
from the average stated belief by more than 0.1. In the other 13 cases, the average estimates lie in
the immediate neighborhood of the average statements. In this sense, the model is able to“recover” the average belief statements. Qualitatively, all of these observations apply also toestimates with higher numbers of types.
Comparing the estimated average beliefs between the two tasks, i.e. between Table VII
and Table VIII, we see much larger differences. Although the average belief estimates appear tobe slightly correlated over the two tasks, the difference between the estimates is very large insome games, and only in one case (Game #11) are both of the estimated parameters of the twomodels within a distance of 0.1.
This leads to the question whether the differences between the two belief estimates are
statistically significant. To answer this question we specify a model that combines the actions
model and the stated beliefs model (so the log likelihood is given by the sum of (2) and (6)). We
estimate this joint model under the restriction that the null hypothesis (7) holds, and perform
likelihood ratio tests to determine whether one can uphold the hypothesis that underlying beliefs
are constant over the two tasks. Table IX contains the estimation results for the joint data. In
these estimations, the number of types for the belief statements was again K = 4 , but again we
ran the estimations also for other possible values of K . Table X shows the marginal level ofthe hypothesis that the underlying beliefs are stable between the two tasks. Hence, this set of test confirms that the
belief elicitation procedure had no effect on the action data.
31

significance of rejecting the null hypothesis, separately listed for each of the games, andseparately for all K ∈ {1,...,6} .
The table shows that the null hypothesis of constant average beliefs over the two tasks isrejected in most games, and in many cases at high levels of significance. More specifically,
consider the case of K = 4 , in the fourth row of the table. In five out of the 14 games, thehypothesis that subjects hold consistent beliefs across tasks is rejected at the level of p=0.01. In
five additional games, the hypothesis is rejected at a level of p=0.05. Very similar results holdfor all other values of K that we considered. For any K ∈ {1,...,6} , the number of rejections at
the level of p=0.05 lies between eight and ten, out of 14 possible rejections.
In sum, we find persistent evidence that the beliefs underlying the subjects’ actions arelikely different from the beliefs that are elicited when subjects are asked directly. (And thisdiscrepancy appears although we use an incentive-compatible payoff rule to reward for the belief
statements.) An alternative interpretation is that the subjects’ actions follow a process that is notgoverned by beliefs. Recall that the model estimation from the action data critically relies on theassumption that subjects hold some beliefs that they respond to, according to the logistic
expression (1). Hence, the fact that we reject the consistency hypothesis between the two tasks
may well be driven by the insufficiency of this assumption. Plausibly, some subjects do notrespond to any consistent set of beliefs when they play a game for the first time, and only when
they are asked to state beliefs they form a theory of mind about the opponent.
Given that we observe significant inconsistencies between the actions and the belief
statements, the question arises whether the nature of these inconsistencies can be described in a
concise way. While Section 3 already contained a descriptive discussion, the next section
presents an analysis within our probabilistic-choice model. There, we again consider theboundedly rational models that we used to design the experiment, and ask which of these models
explains the behavior best. Since all eight models can be estimated from the action data as wellas the belief statement data, the estimation results may provide a more reliable insight into what
the general pattern of inconsistency between the two tasks is.
We provide a benchmark for comparison with the models examined in the next section,
by first estimating the single-type model using all games simultaneously in a single procedure,
without separating the data game by game. This estimation parallels the estimation of the simple
models in the next section, except that here the underlying beliefs are unrestricted. That is, we

32

maximize expressions analogous to (2) and (5), but under additional assumptions needed toincorporate the data from all games: We assume that errors are i.i.d. not just across subjects
within a game, but also across games. Table XI’s first and second panel of rows give theestimated beliefs and the precision parameter, using the action data and the stated belief data,
respectively. The third panel reports the estimated beliefs using the action data and the statedbelief data jointly. Each set of rows reports the estimates for each of the treatments, and after
pooling all treatments.
5. Boundedly Rational Models of Normal-Form Game PlayIn this section we consider eight models that have enjoyed some success in explaining
subjects’ play of normal-form games. We consider the five models introduced in Section 2, plus
three other models. All of these models can be viewed as special cases of the unrestricted belief
models we presented in Section 4. The five models introduced in Section 2 come equipped withspecific beliefs about opponents’ play. The other three models are less restrictive, as they not
fully specify those beliefs a priori, but impose some structure on what kind of beliefs players
might hold. Since all these models make predictions about players’ first order beliefs about theiropponents, besides making predictions about which actions is to be played, we can use subjects’belief statements to discriminate between them. This dimension has not been explored inprevious studies, which have focused on predicted play only.40 By also analyzing subjects’ statedbeliefs, our study hopefully adds to the debate of the ability of these models in understanding
subjects’ behavior in strategic situations.
The eight models we consider are nested in the models presented in Section 4 byspecifying an underlying first order belief bg ( bga for the action model, and bgbs for the belief
statement model). For some of the models, this belief is determined by one or more parameters,
which have to be estimated from the data in addition to the precision parameters λa and λbs .
Here, unlike in the previous section, we do not allow subject heterogeneity. Rather, as statedabove, our goal is to identify the behavioral rule that best describes the data at the aggregate
level.

40

Others, e.g., Nyarko and Schotter (2002), have explored the relationship between actions and beliefs in the context
of learning models. Our paper explores this relationship in the context of boundedly-rational models of one-shot
play.
33

(i) Nash Equilibrium model (NE): bg is the opponent’s Nash Equilibrium strategy.
(ii) Naïve Level-1 model (L1, Stahl and Wilson, 1994, 1995): bg is uniform over the

opponent’s actions, bg = (1 / 3, 1 / 3, 1 / 3) .
(iii) D1 model (D1, Costa-Gomes, Crawford, and Broseta, 2001): bg is uniform over the

opponent’s undominated actions only, and equal to zero for dominated actions.
(iv) Level-2 model (L2, Costa-Gomes, Crawford, and Broseta, 2001, a relative of Stahl
and Wilson, 1994, 1995), bg is the opponent’s best response to the uniform prior,bg = arg max
u gj ((1 / 3, 1 / 3, 1 / 3), b j ).
jb(v) Optimistic model (Opt): bg is given by the opponent’s strategy corresponding to theown maximum payoff, bg = arg max(max
u gi (b i , b j )).
j
i
b

b

(vi) Logit Equilibrium model (LE, McKelvey and Palfrey, 1995): Both players employ alogistic response function when choosing their actions, with an identical precisionparameter λa . Both players are aware of this, are aware that their respective opponent isaware of this, are aware that ... (analogously on all levels of reasoning). As aconsequence, bg satisfies the fixed-point property bg = r a (r a (bg , λa ), λa ) .
(vii) Asymmetric Logit Equilibrium model (ALE, Weizsäcker, 2003): Identical to the LE~model, but the decision noise parameter that a subject attributes to her opponent, λ a , isallowed to be different from the subject’s own noise parameter, λa . Hence,~
bg = r a (r a (bg , λa ), λ a ) .
(viii) Noisy Introspection model (NI, Goeree and Holt, 2003): Subjects employ logistic

response functions on all levels of reasoning, but the precision parameter constantly
decreases with higher levels of the reasoning process. Formally, define t , 0 ≤ t < 1, as theinverse ratio of the decision-maker’s own response precision, λa , and the response~~
precision attributed to the opponent, λ a , such that λ a = tλa . Then, bg is given by
bg = lim r a (r a (...(b, t n λa ),..., t 2 λa ), tλa ), for some arbitrary end point of the reasoningn →∞process, b , which is irrelevant for bg in the limit, as n → ∞ .

34

All eight models can be interpreted in terms of degrees of rationality attributed to the
opponent’s decisions, to the opponent’s beliefs about a subject’s own decisions, etc. (whererationality is understood here as best responding to a given set of beliefs): The NE model
imposes perfect response rationality on all levels of reasoning. The L1 model imposes norationality whatsoever on the opponent’s decisions. The D1 model, similar to L1, attributes norationality to the opponent’s decisions except that he is assumed to identify and exclude
dominated decisions. The L2 model attributes a high response precision to the opponent, who
herself imposes no rationality whatsoever on her opponent’s decisions. The Optimistic model
assumes a specific shortsightedness in that only the own maximum payoff is identified, andsubjects behave as if the opponent would pick the action corresponding to this payoff. The LEmodel, in contrast to all of the preceding models, imposes a consistency between probabilistic
decisions and beliefs, as the decision noise is taken into account, on all levels of reasoning.
Notice that, as λa approaches infinity, responses on all levels of reasoning approach best
responses, so the resulting LE prediction is a Nash Equilibrium strategy profile. The ALE model,
likewise, assumes that the decision-maker takes decision noise into account, on all levels of~
reasoning. However, the “rational expectations” assumption ( λ a = λa ) about the opponent’s~
response precision is relaxed, as a subject is allowed to attribute arbitrary levels of precision, λ a ,~to the opponent. The model therefore encompasses as special cases both the L1 model ( λ a = 0 )~and the LE model ( λ a = λa ). The NI model, in a very similar manner, has the L1 model and the
LE model as special or limit cases ( t = 0 , and t → 1 , respectively). The main new feature of NI
is, however, that beliefs are assumed to get more and more noisy on higher levels of thereasoning process.41
Tables XII and XIII present the parameter estimates for the eight models underconsideration, as well as the estimated log likelihoods using the action data, and the beliefstatement data, respectively.
First, consider the action data (Table XII). We estimate one parameter (the response
precision of the actions, λa ) for the NE, L1, D1, L2, Opt, and LE models, and two parameters~
for the ALE and NI models. The NI model fits the action data the best. The low estimate of λ a

41

Supporting this assumption, Kübler and Weizsäcker (2004) estimate a logistic-response model using data fromexperimental cascade games, and consistently find that the subjects’ reasoning gets noisier on higher levels.
35

means that players assign a low response precision to their opponents. However, it also meansthat players’ beliefs about their opponents’ actions are only slightly influenced by the payoffs ofthe games being played. Players expect their opponents to choose actions in a close to randommanner, which is precisely the belief that L1 players have about their opponents’ play. This
explains why the L1 model is a very close second. And, it also explains why the ALE model, of~
which L1 is a special case, cannot improve the fit in the data (ALE’s λ a parameter is estimatedto be zero). The general picture emerging from the three boundedly rational models with the best
fit for the action data is that players believe their opponents’ choices to be close to random,which can be interpreted in two ways: they believe their opponents do not succeed in choosing
actions that maximize their expected payoffs, or, otherwise, best respond to their beliefs, which
are very heterogeneous across players, and as a result choose the actions available to them withalmost equal probability.42
Do we draw the same conclusions when analyzing the belief-statement data? Do we inferfrom subjects’ stated beliefs that the models that perform the best for the action data are the bestmodels here as well? We estimate one parameter (the response precision of the first order belief
statements, λbs ) for the NE, L1, D1, L2, Opt, two parameters for the LE model ( λbs , and theown actions’ precision parameter, λa ), and three parameters for the ALE and NI models ( λbs , the~own action’s precision parameter, λa , and the other player action’s precision parameter λ a ). It is
important to keep in mind that the actions’ response precisions are used here only to estimate
players’ underlying beliefs, as no action data enters the log-likelihood specification.
Four of the eight models (NE, L1, D1, and Opt) perform no better than random behavior.
The parameter, λbs , is estimated to be zero. As a result, all the points in the two dimensional
simplex have the same probability of being stated, regardless of the underlying belief, bg , themodel assigns to the player. ALE has the best fit of the other four models. It is closely followedby L2. NI and LE perform substantially worse. In all these models the parameter estimate of λbs
low. Regardless of a model’s underlying belief, subjects’ low response precision leads them to bealmost as likely to state any other belief, as their underlying belief.
42

It is worthwhile to compare the attained log-likelihoods of the eight models with the log-likelihood attained by thegeneral one-step model, which is reported in Table XI. Since the latter model generalizes the eight low-parametermodels and outperforms each of them, one can conclude that the belief restrictions in (i) – (viii) are all rejected infavor of the general model.
36

~
Notice that the ALE parameter estimates of λa and λ a , which are instrumental inestimating this model’s underlying belief, differ markedly from the estimates based on the action
data. When belief statements are used to infer players’ beliefs, a very large precision parameter~λ a is attributed to the opponent, while the subjects’ own precision parameter λa is zero, i.e., theopponent is perceived as if responding to uniform behavior by the player. Such behavior
corresponds very closely to the L2 model, which also does very well in the belief statement data.
Taken together, our findings can be summarized as follows. Subjects play games as if
attributing a low degree of response rationality to their opponents thereby expecting them tochoose actions randomly. On the contrary, subjects state beliefs that ascribe to their opponents
the ability to choose actions that are best responses to beliefs, which, in turn, are estimated to beuniform over the player’s own decisions. Different boundedly rational models of behavior are
selected on the basis of the action and belief statement data sets. Overall, we find that subjects
chose L1 actions, and state L2 beliefs. These two behaviors are inconsistent with each other. If a
subject states the belief that she expects her opponent to play his L1 choice, she should in turnchoose an action that is a best response to her belief, and play the L2 choice. She should not
behave like an L1 type herself. Subjects seem not to be aware of this inconsistency.
As discussed earlier, one possible interpretation is that while our subjects play our games
as if reacting to their own monetary incentives, they fail to realize that their opponents also react
to monetary incentives. While our subjects best respond to their beliefs, they assume theiropponents do not, and therefore expect their actions to be random. However, when asked which
actions they expect their opponent to play, they put themselves on the shoes of their opponent,
and transpose their own reasoning logic to the decision faced by their opponent. This timearound, they see their opponent as reacting (like them) to monetary incentives, best responding totheir beliefs, rather than choosing actions randomly. Likewise, they assume their opponent tohave beliefs about them, which are approximately the same beliefs they have about theiropponents, i.e., expected play is random. Taking into account that subjects apply the same
thought process to the decision situation that they face and the one they perceive their opponents
face, our subjects’ decisions (actions and stated beliefs) reveal an appallingly small depth ofreasoning under both tasks.43
43

In terms of limits of subjects’ depth of reasoning, the results from the action data are generally consistent withthose from previous studies that also use a set of normal-form matrix games, such as Stahl and Wilson (1994, 1995),
37

6. Conclusions

This paper reports on an experiment where subjects played and stated first order beliefs
about their opponents’ actions in 14 matrix games. We use both data sets (actions and statedbeliefs) to infer and characterize players’ strategic thinking in games. To do so we explore aunified way to deal statistically with both kinds of choices. A main feature of our framework is
to regard subjects’ actions and stated beliefs as decisions that respond to monetary incentives. It
is possible for a subject to state a belief that differs from his underlying belief, the same way a
subject might choose an action that he did not intend to play. This possibility is introduced
because even when beliefs are elicited using incentive compatible schemes we cannot a priori
take the subjects’ stated expectations at face value. We also note that allowing a subject’s statedbelief to differ from her underlying belief (assuming she has one) opens the door to the use ofstatistical inference to draw conclusions from elicited beliefs.
The main conclusions can be summarized as follows. Subjects do not play theirequilibrium actions, and neither do they expect their opponents to do so. But a subject’s actions
are often not expected-payoff maximizing best responses to her stated beliefs about her
opponents’ play that have played important roles in the literature. Using the framework describedabove we find evidence that actions and stated beliefs are generated by significantly different
perceptions of the games and/or of how opponents play games. In particular, this result holds inthe context of our most general specification, where we impose no restrictions on the beliefs, andaccount for subject heterogeneity.
To identify a positive model of behavior, we then restrict players’ strategic thinking toconform to a set of existing boundedly rational models of play. These estimation results suggestthat subjects play games as if attributing a low degree of response rationality to their opponents –as if they expected the opponents to play randomly. But in contrast, when subjects state beliefs
they ascribe to their opponents the ability to choose actions that are best responses to beliefs,
which, in turn, seem to be uniform over the player’s own decisions.
Much work remains ahead, in the form of allowing for even more general models of
behavior, and studying the generalizability of the results to other games. In our view, the results
Costa-Gomes, Crawford, and Broseta (2001), Goeree and Holt (2003), and Weizsäcker (2003), although we observea somewhat lower depth of reasoning. Related experimental studies (Nagel, 1995, Ho, Camerer, and Weigelt, 1998,
Kübler and Weizsäcker, 2004) typically find an average of two steps of reasoning.
38

strongly suggest that a caveat is in order when assuming that actions are driven by beliefs about
the opponent, at least in the absence of learning opportunities. But this conclusion may not apply
to dynamic games. Perhaps, the formation of expectations about others’ behavior, and theretrieval of such expectations, may be processes that are largely driven by feedback and repeatedinteractions. We hope to explore these issues in the future.

39

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42

Table I
Games Classified by Strategic Structure and Models’ Predicted ActionsGame Dominance Rounds of Nash Naïve
Solvable Dominance

L2

D1 Optimistic

L1

#1

Y

2,3

T-L M-L T-M T-L

B-M

#2

Y

3,2

M-L M-M T-L M-L

T-R

#3

Y

2,3

B-R T-M B-M B-M

M-M

#4

Y

3,2

M-M T-L T-M T-M

T-R

#5

Y

2,3

T-M B-L

T-L

M-L

#6

Y

3,2

B-M M-R M-M M-M

M-L

#7

Y

2,3

M-R B-R M-R M-R

T-M

#8

Y

3,2

B-R B-L B-R B-R

T-M

#9

Y

3,4

T-R

T-L M-R T-M

M-L

#10

Y

4,3

B-L

T-L B-M M-L

T-M

#11

N

--,--

M-M B-M M-R B-M

T-L

#12

N

--,--

B-L M-R M-M M-R

T-L

#13

N

--,--

T-R T-M B-R T-M

M-L

#14

N

--,--

T-L B-M M-M B-M

T-R

T-L

Table II
Proportions of Actions that are Matched by Model Predictions (Data Pooled AcrossTreatments and Player Roles, Presented from Row Player’s Point of View)
Game

Behavioral Model
NashNaïve L1

L2

D1

Optimistic

#1
#2
#3
#4
#5
#6
#7
#8
#9
#10
#11
#12
#13
#14
Avg.

0.21
0.60
0.25
0.20
0.30
0.07
0.23
0.54
0.72
0.44
0.32
0.20
0.59
0.25
0.351

0.21
0.20
0.25
0.78
0.30
0.88
0.23
0.54
0.27
0.44
0.32
0.67
0.24
0.26
0.399

0.21
0.60
0.25
0.78
0.30
0.88
0.23
0.54
0.72
0.14
0.53
0.67
0.59
0.49
0.495

0.31
0.20
0.12
0.78
0.07
0.88
0.35
0.16
0.27
0.42
0.15
0.13
0.16
0.25
0.304

0.48
0.60
0.63
0.78
0.63
0.88
0.41
0.54
0.72
0.42
0.53
0.67
0.59
0.49
0.598

Table III
Average Probability Mass of Stated Beliefs on Model Predictions (Data Pooled AcrossTreatments and Player Roles, Presented as Column Player’s Prediction of Row’s Actions)Game

Behavioral Model
NashNaïve L1

L2

D1

Optimistic

#1
#2
#3
#4
#5
#6
#7
#8
#9
#10
#11
#12
#13
#14
Avg.

0.21
0.47
0.25
0.23
0.26
0.18
0.24
0.45
0.56
0.29
0.33
0.20
0.51
0.32
0.322

0.21
0.33
0.25
0.09
0.26
0.67
0.24
0.45
0.33
0.29
0.33
0.50
0.22
0.23
0.314

0.21
0.47
0.25
0.68
0.26
0.67
0.24
0.45
0.56
0.21
0.38
0.50
0.51
0.45
0.417

0.41
0.33
0.23
0.68
0.27
0.67
0.42
0.29
0.56
0.50
0.28
0.30
0.27
0.32
0.395

0.38
0.47
0.52
0.68
0.46
0.67
0.34
0.45
0.56
0.50
0.38
0.50
0.51
0.45
0.491

Table IV
Proportions of Belief Statements that are Matched by Model Assumptions About
Underlying Beliefs (Data Pooled Across Treatments and Player Roles, Presented from Row
Player’s Point of View)
Game

Behavioral Model
NashNaïve L1

L2

D1

Optimistic

#1
#2
#3
#4
#5
#6
#7
#8
#9
#10
#11
#12
#13
#14
Avg.

0.05
0.04
0.01
0.03
0.03
0.02
0.05
0.04
0.08
0.11
0.03
0.07
0.06
0.04
0.047

0.04
0.04
0.16
0.03
0.20
0.02
0.05
0.04
0.08
0.02
0.01
0.02
0.06
0.04
0.058

0.02
0.03
0.06
0.08
0.02
0.07
0.01
0.04
0.04
0.02
0.05
0.02
0.10
0.03
0.042

0.04
0.09
0.16
0.02
0.20
0.05
0.02
0.12
0.08
0.02
0.03
0.07
0.06
0.01
0.069

0.07
0.03
0.02
0.08
0.02
0.07
0.02
0.04
0.04
0.02
0.05
0.02
0.10
0.03
0.044

Table V
Summary Statistics of Stated Beliefs (Data Pooled Across Treatments)
Game Mean Squared Deviation
From Mean
Rows
Columns

#1
#2
#3
#4
#5
#6
#7
#8
#9
#10
#11
#12
#13
#14
Avg.

0.54
0.34
0.30
0.17
0.19
0.25
0.30
0.33
0.33
0.42
0.30
0.30
0.17
0.36
0.32

0.51
0.34
0.25
0.24
0.28
0.16
0.25
0.41
0.29
0.47
0.35
0.32
0.24
0.39
0.33

Mean Squared Error

Average Probability Score

From Opponent’s Choice
Rows
Columns

0.21
0.17
0.24
0.17
0.16
0.23
0.22
0.19
0.21
0.13
0.20
0.26
0.17
0.27
0.20

0.17
0.28
0.36
0.30
0.33
0.11
0.22
0.33
0.20
0.18
0.28
0.30
0.30
0.30
0.26

Note: Feasible range is [0,2].

Rows

Columns

0.883
0.742
0.918
0.342
1.006
0.834
0.736
0.436
0.911
0.745
0.724
0.721
0.605
0.854
0.747

0.849
0.539
0.604
0.775
0.751
0.752
0.814
0.747
0.901
0.833
0.535
0.829
0.774
0.705
0.743

Table VI
Features of Stated Beliefs (Data Pooled Across Treatments, and Across Different Sets ofGames)
Game Average Probability Score
Rows
Columns

Discrimination Score
Rows
Columns

Calibration Score
Rows
Columns

#1
0.883
0.849
0.258
0.325
0.583
0.530
#2
0.742
0.539
0.349
0.100
0.527
0.257
#3
0.918
0.604
0.288
0.233
0.613
0.387
#4
0.342
0.775
0.070
0.318
0.188
0.544
#5
1.006
0.751
0.261
0.209
0.636
0.426
#6
0.834
0.752
0.298
0.306
0.505
0.413
#7
0.736
0.814
0.225
0.365
0.509
0.570
#8
0.436
0.747
0.104
0.204
0.221
0.473
#9
0.911
0.901
0.376
0.339
0.637
0.616
#10
0.745
0.833
0.298
0.304
0.493
0.506
#11
0.724
0.535
0.186
0.062
0.445
0.361
#12
0.721
0.829
0.232
0.326
0.538
0.534
#13
0.605
0.774
0.167
0.258
0.403
0.413
#14
0.854
0.705
0.302
0.233
0.606
0.376
Avg.
0.747
0.743
0.244
0.256
0.493
0.458
DA
0.597
0.666
0.164
0.156
0.184
0.216
ODS
0.826
0.795
0.097
0.146
0.316
0.284
EQ.
0.835
0.776
0.145
0.154
0.377
0.296
All
0.747
0.743
0.055
0.078
0.198
0.175
Note: “DA” (Games in which opponent has a dominated action), “ODS” (Other
dominance-solvable games), “EQ.” (Non-dominance solvable games).

Table VII
Estimates of Belief Parameters, Game by Game Using Action Data
(Presented from the Column Player’s Perspective, Data Pooled Across Treatments)
Game ID#
a

λ
a
b
g,T
a
b
g, M

ln L

7

4

9

5

12

2

14

3

8

11

6

1

10

13

1.89

5.04

5.26

10.81

7.77

3.37

6.37

20.22

4.34

6.51

7.67

1.93

16.33

6.42

0

0.59

0.75

0.46

0.17

0.18

0.53

0.01

0.44

0.24

0.29

0.98

0.26

0.42

0

0.05

0.12

0.37

0.41

0.39

0.09

0.46

0.36

0.41

0.54

0.02

0.68

0.39

-131.35 -113.59 -128.21 -59.19 -133.75 -133.75 -108.91 -74.45 -137.3 -121.54 -107.11 -121.54 -80.62 -125.93

Table VIII
Belief Parameter Estimates for the Mixture Model with 4 Types, Using Stated beliefs Data
(Presented from the Column Player’s Perspective, Data Pooled Across Treatments)
Game ID#

7

4

9

5

12

2

14

3

8

11

6

1

10

13

bs

3.63

6.11

4.73

3.2

3.25

3.38

2.27

2.93

2.83

2.86

3.59

2.59

2.15

1.95

λ

p

1

0.1

0.03

0.17

0.07

0.09

0.07

0.05

0.07

0.07

0.13

0.02

0.09

0.05

0.09

bs ,1
b
g,T

0.05

0

0.13

0.94

0

0

0

0

0.95

1

0.91

0.95

0

0

bs ,1
b
g, M

0.95

0.84

0.87

0.06

0.01

0

1

0

0.05

0

0.03

0.05

1

1

p

2

0.17

0.27

0.25

0.12

0.1

0.11

0.16

0.09

0.17

0.15

0.09

0.28

0.18

0.22

bs , 2
b
g,T

0.1

0.76

0.62

0

0.87

1

0

0

0

0

0

0

0

1

bs , 2
b
g, M

0.09

0.24

0.38

1

0.13

0

0

0.93

1

1

0.15

0.88

0

0

p

3

0.28

0.33

0.28

0.17

0.15

0.37

0.22

0.29

0.32

0.19

0.35

0.29

0.31

0.23

bs , 3
b
g,T

1

0.47

1

0

0.29

0.18

1

1

0.43

0

0.21

0

1

0.54

bs , 3
b
g, M

0

0.4

0

0

0.32

0.82

0

0

0.24

0.11

0.55

0

0

0

p

4

0.46

0.36

0.31

0.64

0.66

0.45

0.57

0.55

0.44

0.53

0.53

0.34

0.47

0.46

bs , 4
b
g,T

0.3

1

0.5

0.29

0.3

0.37

0.18

0.5

0.18

0.27

0

0.21

0.52

0.52

bs , 4
b
g, M

0.27

0

0.3

0.22

0.7

0.39

0.28

0.22

0

0.31

1

0.41

0.27

0.32

g,T

0.44

0.73

0.61

0.25

0.33

0.35

0.32

0.56

0.28

0.27

0.1

0.16

0.55

0.58

Avg. b bs
g, M

0.23

0.23

0.33

0.26

0.52

0.48

0.21

0.21

0.25

0.34

0.74

0.39

0.17

0.24

Avg. b bs

ln L-1036.21 -933.3

Avg. b. st. (T) 0.42
Avg. b. st. (M) 0.24

0.68
0.23

-982.45 -1038.79 -1027.46 -1038.85 -1048.34 -1031.19 -1044.54 -1057.54 -966.46 -1043.58 -1039.9 -1048.51

0.57
0.33

0.26
0.27

0.30
0.50

0.45
0.35

0.32
0.24

0.52
0.23

0.29
0.26

0.28
0.33

0.14
0.67

0.21
0.38

0.50
0.21

0.51
0.27

Table IX
Belief Parameter Estimates for the Mixture Model with 4 Types, Using Actions and Stated Beliefs(Presented from the Column Player’s Perspective, Data Pooled Across Treatments)
Game ID#
λ
λ

7

4

9

5

12

2

14

3

8

11

6

1

10

13

3.23

2.07

10.04

11.2

1.77

1.1

5.33

9.49

0.5

8.03

3.97

9.31

21.99

5.7

3.6

6.08

5.6

3.46

2.52

3.44

2.29

2.96

2.73

2.87

3.67

2.61

2.2

2.13

a

bs

p

1

0.1

0.03

0.13

0.08

0.09

0.07

0.04

0.08

0.11

0.13

0.04

0.15

0.05

0.1

1
b
g,T

0.04

0

0.14

0.93

0.91

0

0.04

0

0.81

1

0.94

1

0

0

1
g, M

0.96

0.83

0.86

0.07

0.09

0

0.96

0

0.19

0

0

0

0.99

1

b

p

2

0.18

0.26

0.19

0.11

0.13

0.11

0.16

0.09

0.17

0.16

0.09

0.25

0.2

0.18

2
b
g,T

0.09

0.76

0.74

0

0

1

0

0

0

0

0

0

0

0.5

2
b
g, M

0.09

0.24

0.26

1

1

0

0

0.92

1

1

0.17

0.88

0

0.5

p

3

0.25

0.33

0.24

0.21

0.15

0.39

0.26

0.27

0.31

0.18

0.37

0.25

0.29

0.2

3
b
g,T

1

0.47

1

0.09

0

0.21

1

1

0.4

0

0.23

0

1

1

3
b
g, M

0

0.4

0

0

0.15

0.79

0

0

0.21

0.11

0.54

0

0

0

p

4

0.47

0.37

0.44

0.61

0.62

0.43

0.53

0.55

0.41

0.53

0.5

0.35

0.47

0.52

4
b
g,T

0.3

1

0.49

0.3

0.38

0.37

0.2

0.5

0.16

0.27

0

0.24

0.52

0.51

4
b
g, M

0.27

0

0.32

0.23

0.62

0.38

0.26

0.21

0

0.31

1

0.4

0.27

0.15

g,T

0.41

0.73

0.62

0.27

0.32

0.35

0.37

0.55

0.28

0.27

0.12

0.23

0.53

0.55

g, M

0.24

0.22

0.3

0.25

0.55

0.47

0.18

0.2

0.26

0.35

0.72

0.36

0.17

0.27

Avg. b
Avg. bln L-1172.42 -1061.81 -1115.28 -1100.29 -1168.53 -1179.13 -1162.49 -1110.66 -1187.43 -1179.34 -1084.69 -1173.29 -1120.76 -1176.43

Table X
Marginal Significance Levels of Accepting the Null Hypothesis (7) that Underlying Average
Beliefs are Identical in Both Tasks, Using the Mixture Model with K=1…6 Types
Game ID#

7

4

9

5

12

2

14

3

8

11

6

1

10

13

Sig. at K=1

0.306

0.000

0.011

0.002

0.003

0.003

0.079

0.001

0.084

0.764

0.000

0.688

0.000

0.004

Sig. at K =2 0.075 0.000 0.000 0.286 0.011 0.003 0.009 0.003 0.084 0.764 0.000 0.000 0.092 0.036
Sig. at K =3 0.022 0.000 0.016 0.200 0.016 0.003 0.011 0.024 0.085 0.856 0.000 0.000 0.052 0.167
Sig. at K =4 0.021 0.000 0.026 0.202 0.002 0.005 0.015 0.018 0.011 0.912 0.000 0.001 0.923 0.265
Sig. at K =5 0.019 0.000 0.999 0.235 0.021 0.001 0.005 0.021 0.095 0.952 0.000 0.001 0.821 0.310
Sig. at K =6 0.009 0.000 0.581 0.045 0.000 0.006 0.004 0.002 0.060 0.980 0.000 0.000 0.308 0.170

Table XI
Parameter Estimates Assuming Subject Homogeneity(Using Action data, Stated Belief Data, and Action and Stated Belief Data)
Treatments

Estimated Beliefs according to Game ID#
a

λ

bs

7

4

9

5

12

2

14

3

8

11

6

1

10

8

A1

7.28

--

1A

8.07

--

1A1A

7.99

--

Pooled

7.30

--

A1

--

0.33

1A

--

0.41

1A1A

--

0.32

Pooled

--

0.33

0.47
0.53
0.46
0.54
0.33
0.67
0.40
0.60
0.65
0.00
0.48
0.08
0.60
0.00
0.64
0.00
0.55
0.00
0.44
0.09
0.41
0.09
0.50
0.00

0.60
0.11
0.39
0.25
0.40
0.30
0.46
0.22
1.00
0.00
1.00
0.00
1.00
0.00
1.00
0.00
0.94
0.00
0.83
0.00
0.92
0.00
0.90
0.00

0.64
0.27
0.73
0.14
0.64
0.19
0.68
0.19
0.84
0.16
0.66
0.34
0.73
0.27
0.76
0.24
0.80
0.20
0.89
0.11
0.86
0.14
0.85
0.15

0.48
0.52
0.38
0.62
0.37
0.45
0.42
0.58
0.00
0.20
0.15
0.15
0.06
0.00
0.06
0.11
0.00
0.38
0.00
0.42
0.00
0.27
0.00
0.36

0.31
0.30
0.21
0.42
0.04
0.48
0.20
0.39
0.34
0.66
0.14
0.86
0.00
1.00
0.14
0.86
0.51
0.49
0.24
0.71
0.00
0.72
0.25
0.67

0.57
0.20
0.39
0.29
0.53
0.22
0.48
0.25
0.31
0.69
0.39
0.61
0.27
0.73
0.44
0.56
0.34
0.45
0.35
0.40
0.14
0.57
0.27
0.48

0.66
0.03
0.45
0.18
0.54
0.19
0.55
0.13
0.41
0.00
0.25
0.00
0.18
0.00
0.26
0.00
0.50
0.00
0.25
0.00
0.28
0.00
0.33
0.00

0.00
0.58
0.00
0.58
0.00
0.59
0.00
0.60
1.00
0.00
0.81
0.00
0.84
0.00
0.89
0.00
0.92
0.08
0.94
0.06
0.93
0.07
0.92
0.08

0.62
0.25
0.51
0.32
0.65
0.23
0.58
0.27
0.25
0.00
0.30
0.00
0.00
0.20
0.18
0.03
0.24
0.31
0.26
0.30
0.00
0.42
0.15
0.34

0.46
0.31
0.25
0.29
0.17
0.48
0.28
0.37
0.46
0.08
0.00
0.46
0.00
0.42
0.11
0.35
0.43
0.31
0.00
0.48
0.00
0.61
0.10
0.49

0.30
0.54
0.34
0.53
0.26
0.52
0.30
0.56
0.00
0.90
0.00
0.86
0.00
0.92
0.00
0.90
0.03
0.97
0.09
0.91
0.00
1.00
0.00
1.00

0.35
0.65
0.29
0.71
0.32
0.68
0.33
0.67
0.00
0.36
0.02
0.53
0.00
0.41
0.00
0.44
0.12
0.31
0.27
0.42
0.27
0.27
0.22
0.34

0.20
0.80
0.00
0.96
0.08
0.92
0.05
0.95
1.00
0.00
0.87
0.00
0.79
0.00
0.90
0.00
0.73
0.00
0.57
0.00
0.60
0.00
0.64
0.00

0.31 -499.12
0.69
0.39 -508.69
0.20
0.50 -570.71
0.17
0.41 -1600.32
0.35
0.71 -4691.74
0.29
0.81 -4903.52
0.19
0.97 -5385.52
0.03
0.84 -15001.93
0.16
0.55 -5254.41
0.45
0.69 -5489.49
0.31
0.89 -6027.17
0.11
0.74 -16799.93
0.26

λ

A1

4.23 0.33

1A

4.37 0.38

1A1A

3.9

Pooled3.92 0.34

0.32

ln L

Table XII
Estimates of Low-Parameter Models Using Action Data
NE

D1

L2

Opt.

LE

ALE

NI

a

ln L

λ

a

ln L

λ

a

ln L

λ

a

ln L

λ

a

ln L

λ

a

ln L

λ

a

λ

~a

ln L

λ

a

λ

~a

ln L

0.60

-611.666.13-541.903.73-571.941.31-593.080.65-607.913.34-565.87

6.13

0.00

-541.90

6.48

1.17

-539.110.53-643.01

7.60-540.903.53-602.031.46-618.890.90-628.223.73-581.18

7.65

0.00

-540.83

7.65

0.69

-539.750.75-699.827.09-602.363.84-652.99

1.49-676.660.84-694.96

3.87-637.33

7.10

0.00

-602.35

7.23

1.01

-599.56

0.63-1955.01

6.95-1686.47

3.69-1827.23

1.43-1888.77

0.82-1931.81

3.61-1785.06

6.95

0.00

-1686.47

7.07

0.92

-1679.91

λ

A1
1A
1A1A
PooledL1

Table XIII
Estimates of Low-Parameter Models Using Belief Statement Data
NE

D1

L2

Opt.

LE

ALE

NI

bs

ln L

λ

bs

ln L

λ

bs

ln L

λ

bs

ln L

λ

bs

ln L

λ

a

λ

bs

ln L

λ

a

λ

λ

0.00

-4769.63

0.00-4769.63

0.00-4769.63

0.18-4717.64

0.00-4769.63

7.59

0.00

-4769.63

0.00

28.20

0.20

0.00

-5008.11

0.00-5008.11

0.04-5007.74

0.23-4924.41

0.00-5008.11

8.08

0.11

-5000.79

0.00

21.70

0.28

0.00

-5485.07

0.00-5485.07

0.00-5485.07

0.22-5402.75

0.00-5485.07

9.02

0.00

-5483.38

0.03

40.10

0.00

-15262.8

0.00-15262.8

0.00-15262.8

0.21-15046.5

0.00-15262.8

8.09

0.00

-15260.2

0.00

28.79

λ

A1
1A
1A1A
Pooled

L1

~a

λ

~a

λ

bs

ln L

-4716.89 87.19

20.06

0.20

-4748.54-4921.45 76.76

18.42

0.35

-4943.00

0.22-5402.56 96.65

24.17

0.26

-5443.67

0.23-15043.9 64.98

15.60

0.27

-15142.0

bs

ln L

λ

a

Figure 1 - GamesThe games are ordered as in Table I, but with decisions ordered as they appeared to the subjects;
the equilibrium is identified by underlining its payoffs.
#1
R
#2
L
M
L
78, 73 69, 23 12, 14
21, 67TT
67, 52 59, 61 78, 53
71, 76MM
16, 76 65, 87 94, 79
12, 10B
B
Game #2’s payoffs are obtained by subtracting 2 point to Game #1’s payoffs.

M59, 5750, 6551, 76

R85, 6374, 1477, 92

#3
R
#4
L
M
L
74, 38 78, 71 46, 43
73, 80TT
96, 12 10, 89 57, 25
45, 48MM
15, 51 83, 18 69, 62
40, 76
B
B
Game #4’s payoffs are obtained by adding 2 points to Game #3’s payoffs.

M20, 8564, 7153, 17

R
91, 1227, 5914, 98

#5
R
#6
L
M
L
78, 49 60, 68 27, 35
39, 99TT
10, 82 49, 10 98, 38
83, 11M
M
69, 64 42, 39 85, 56
11, 50B
B
Game #6’s payoffs are obtained by adding 1 point to Game #5’s payoffs.

M36, 2850, 7969, 61

R
57, 8665, 7040, 43

#7
R
#8
L
M
L
84, 82 33, 95 12, 73
47, 30TT
21, 28 39, 37 68, 64
38, 69M
M
70, 39 31, 48 59, 81
80, 58
B
B
Game #8’s payoffs are obtained by subtracting 2 point to Game #7’s payoffs.

M94, 3281, 8372, 11

R36, 3827, 2063, 67

#9
R
#10
L
M
L
57, 58 46, 34 74, 70
60, 59TT
89, 32 31, 83 12, 41
36, 48MM
41, 94 16, 37 53, 23
72, 76
B
B
Game #10’s payoffs are obtained by adding 2 point to Game #9’s payoffs.

M34, 9185, 3343, 14R
96, 4339, 1825, 55

M90, 4353, 7320, 46R
38, 6078, 5219, 78

#11
T
M
B

L
43, 91
39, 2769, 10M
38, 8179, 6866, 21

R92, 6468, 1974, 54

#12
T
M
B

L
25, 2749, 3964, 85

#13
R
#14
L
M
L
M
R
83, 40 23, 68 70, 81
82, 61 36, 46
24, 22TT
93, 45 12, 71 29, 41
43, 17 70, 50
40, 87MM
66, 94 56, 76 21, 70
75, 16 49, 75
57, 35
B
B
Game #13’s payoffs are obtained by adding 2 points to Game #11’s payoffs; Game #14’s payoffs are
obtained by subtracting 3 point to Game #12’s payoffs.

1.0
0.9

Figure 2A - Rows' Actions Frequencies and Columns' Stated Beliefs(Across Treatments)
6

0.8
2
12

0.7

6

Middle0.6
0.5

Actions
Bel. Statements

Bottom

1
12

2

0.4

9
8
11

0.3

14

1
11
13

8
7

7

5

14

10

9

0.2

4

4

3
10

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.0

Figure 2B - Columns' Actions Frequencies and Rows' Stated Beliefs(Across Treatments)

0.9
0.8
3

0.7
3

14

Middle

0.6

11

14

0.5
2

Actions
Bel. Statements

Right

11
13
2

0.4

8

13

8

10

0.3

10

7

6

1
12
7

0.2

4
4

1
6

5
9

12

9

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.0

Figure 2C - Rows' Actions Frequencies and Columns' Stated Beliefs(Treatment A1)
6

0.9
0.8
2
12

0.7

6

Middle0.6
Actions
Bel. Statements

Bottom

0.5

1
14

2

0.4

12

7

9

0.3

8

13

8
1

3
5

4

9

11

10

10
7

0.2

11

4

13
14

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.0

Figure 2D - Columns' Actions Frequencies and Rows' Stated Beliefs(Treatment A1)

0.9
0.8
0.7

3

13
3

Middle

0.6

11
2
14

14

0.5

Actions
Bel. Statements

Right
10

11

0.4

8

13

8

2

1
7

0.3

10
12

6

4

7
9
6

0.2

4

9
1

5

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.0
0.9

Figure 2E - Rows' Actions Frequencies and Columns' Stated Beliefs(Treatment 1A)
6

0.8
2
6

0.7

12

Middle0.6

1
12

Actions
Bel. Statements

Bottom

0.5
0.4

1
8

11

2

11

0.3

9

13
14
5

14

0.2

3
7

3
10
9

8
4

4

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Figure 2F - Columns' Actions Frequencies and Rows' Stated Beliefs
1.0(Treatment 1A)
0.9
0.8

14

3

0.7

3

Middle

0.6
11

0.5

14

2

Actions
Bel. Statements

Right
11

13

0.4

8
2

6

7

12

8

13

0.3

10

1

4
1

6

5

12

0.2

4
9
7

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.0

Figure 2G - Rows' Actions Frequencies and Columns' Stated Beliefs(Treatment 1A1A)

0.9
6

0.8

6
12

2

0.7

Middle

0.6
0.5

12

Actions
Bel. Statements

Bottom

2

1

0.4

9

11
14
1

0.3

8

7
8

7
11

14

4

3

5

10

9

13

0.2

4
3

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Figure 2H - Columns' Actions Frequencies and Rows' Stated Beliefs(Treatment 1A1A)

1.0
0.9

3

0.8
0.7
11

0.6
Middle

3 14
11
14

0.5
0.4

13

8

2

13

8

0.3

4

7

0.2

10
5

1

6
6

Actions
Bel. Statements

Right

2

1

7

4

10

9
12

12
9

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Figure 3A - Game 9's Column Subjects' 1OB (3 Treatments)
1.0
0.9

2

Middle

0.8

3

0.7

2

0.6

2

Average
1st (C)

Bottom
0.5

3

0.4

2

0.3

2

2

0.2

3

2

0.7

0.8

0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.5
Top

0.6

0.9

1.0

Figure 3B - Game 10's Row Subjects' 1OB (3 Treatments)
1.0

2

0.9
0.8
0.7

Middle0.6
Average
1st (R)

Right
0.5
0.4

2

0.3

3

2

3

2

2

2

0.5
Left

0.6

0.2
0.1
0.0
0.0

0.1

0.2

0.3

0.4

0.7

0.8

0.9

1.0

Figure 4A - Empirical PDF of number of subjects with x bestresponses to stated first-order beliefs
0.40
0.35
A1

0.30
PDF

0.25

1A

0.20
0.15

1A1A

0.10

Random

0.05
0.00
0

1

2

3

4

5

6

7

8

9 10 11 12 13 14

Number of subjects with x best-responses to stated first-order beliefs

CDF

Figure 4B - Empirical CDF of number of subjects with x bestresponses to stated first-order beliefs
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00

A1
1A
1A1A
Random

0

1

2

3

4

5

6

7

8

9 10 11 12 13 14

Number of subjects with x best-responses to stated first-order beliefs