A Dynamic Level-k Model in Sequential Games

• 成果类型: Article
• 署名作者: Ho, Teck-Hua; Su, Xuanming
• 署名单位: National University of Singapore; University of California System; University of California Berkeley; University of Pennsylvania
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1120.1645
• 发表日期: 2013
• 页码: 452-469
• 关键词: Level-k models; learning; Sequential games; backward induction; Behavioral game theory

摘要

Backward induction is a widely accepted principle for predicting behavior in sequential games. In the classic example of the centipede game, however, players frequently violate this principle. An alternative is a dynamic level-k model, where players choose a rule from a rule hierarchy. The rule hierarchy is iteratively defined such that the level-k rule is a best response to the level-(k - 1) rule, and the level-infinity rule corresponds to backward induction. Players choose rules based on their best guesses of others' rules and use historical plays to improve their guesses. The model captures two systematic violations of backward induction in centipede games, limited induction and repetition unraveling. Because the dynamic level-k model always converges to backward induction over repetition, the former can be considered to be a tracing procedure for the latter. We also examine the generalizability of the dynamic level-k model by applying it to explain systematic violations of backward induction in sequential bargaining games. We show that the same model is capable of capturing these violations in two separate bargaining experiments.