The two-person beauty contest

• Published in: Games and economic behavior Vol. 62; no. 1; pp. 93 - 99
• Main Authors: Grosskopf, Brit, Nagel, Rosemarie
• Format: Journal Article
• Language: English
• Published: Duluth Elsevier Inc 2008; Elsevier; Academic Press
• Series: Games 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

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...