The α-Beauty Contest:Choosing Numbers, Thinkting Intervals

We present a model for the α-beauty contest that explains common patterns in ex-perimental data of one-shot and iterative games. The approach is based on two basic assumptions. First, players iteratively update their recent guesses. Second, players estimate intervals rather than exact numbers to cope with incomplete knowledge of other players choices. Under these assumptions we extend the cognitive hierarchy model of Camerer, Ho, and Chong (2003a). The extended model is estimated on experimental data from a newspaper experiment.