Cognition and Behavior in Normal-Form Games: An Experimental Study

This paper reports experiments designed to measure strategic sophistication, the extent to which players' behavior reflects attempts to predict others' decisions, taking their incentives into account. Subjects played normal-form games with various patterns of iterated dominance and unique pure-strategy equilibria without dominance, using a computer interface that allowed them to look up hidden payoffs as often as desired, one at a time, while automatically recording their look-ups. Monitoring information search allows tests of game theory's implications for cognition as well as decisions, and subjects' deviations from search patterns suggested by equilibrium analysis help to predict their deviations from equilibrium decisions.