The two-person beauty contest

We introduce a two-person beauty contest game with a unique Nash equilibrium that is identical to the game with many players. However, iterative reasoning is unnecessary in the two-person game as choosing zero is a weakly dominant strategy. Despite this “easier” solution concept, we find that a larg...

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Bibliographic Details
Published inGames and economic behavior Vol. 62; no. 1; pp. 93 - 99
Main Authors Grosskopf, Brit, Nagel, Rosemarie
Format Journal Article
LanguageEnglish
Published Duluth Elsevier Inc 2008
Elsevier
Academic Press
SeriesGames and Economic Behavior
Subjects
Aesthetics
Beauty contest
Beauty contests
Bounded rationality
Competition
Game theory
Guessing game
Strategic studies
Studies
Weak dominance
Beauty contest
Guessing game
C7
Weak dominance
C9
Bounded rationality
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Summary:We introduce a two-person beauty contest game with a unique Nash equilibrium that is identical to the game with many players. However, iterative reasoning is unnecessary in the two-person game as choosing zero is a weakly dominant strategy. Despite this “easier” solution concept, we find that a large majority of players do not choose zero. This is the case even with a sophisticated subject pool.
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ISSN:0899-8256
1090-2473
DOI:10.1016/j.geb.2007.03.004