Social Preferences and Bounded Rationality in the Centipede Game
Channel: proudlydismal
Date: 2012-02-19

Jeremy Tremewan (Vienna) presented an interesting seminar on his research (with co-authors) into social preferences and strategic behaviour in the centipede game. Eliciting detailed information on beliefs about opponents' behaviour his research/experiment shows that contrary to many other findings subjects continue longer in the centipede game in outgroup scenarios vs ingroup scenarios. A prospective reference theory (Viscusi) model is used to help organise and understand this puzzling behaviour - with a bounded rationality explanation: subjects in outgroup treatments treat their beliefs as only partially informative and discount them more highly than do subjects in ingroup treatments (conditional on the PRT model being valid). A lively discussion with many interesting comments.