Level-n Bounded Rationality on a Level Playing Field of Sequential Games

We report experimental results using a multi-task for simple two-player, two- stage extensive-form games. It is suggested that by creating the perception of a "level playing field" the participants are relieved of responsibility for others since competition on a level playing field is presumed to be fair a priori. Consistent with this suggestion, we find that the vast majority of behavior is individualistic. Moreover, we find that a straightforward extension of the Level-n theory of bounded rationality fits this data remarkably well. We also extend this theory to allow other-regarding preferences, and find that about 15% of the population behaves as if utilitarian and/or spiteful