Jena Economic Research Papers

JENA ECONOMIC

RESEARCH PAPERS

# 2015 – 012

Preferences-dependent learning in the Centipede game

by

Astrid Gamba

Tobias Regner

www.jenecon.de

ISSN 1864-7057

The JENA ECONOMIC RESEARCH PAPERS is a joint publication of the Friedrich

Schiller University Jena, Germany. For editorial correspondence please contact

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© by the author.

Jena Economic Research Papers 2015 - 012

Preferences-dependent learning in the

Centipede game

Astrid Gamba

a

b

a∗

Tobias Regner

b

University of Milan-Bicocca, Milan, Italy

University of Jena and Max Planck Institute of Economics, Jena, Germany

August 5, 2015

Abstract

We study experimentally whether heterogeneity of behavior in the Centipede game can be interpreted as the result of a learning process of individuals with different preference types (more and less pro-social) and coarse information regarding the opponent’s past behavior. We manipulate the quality

of information feedbacks provided after each play. If subjects rely only on

their personal database, long run behavior resembles a Self-confirming equilibrium whereby less pro-social types take at earlier nodes due to prediction

errors. Aggregate information release decreases heterogeneity of behavior by

increasing the passing rates of pro-selfs and play moves towards Bayesian

Nash equilibrium.

JEL classifications: C71, C73, C91, D83

Keywords: social preferences, learning, Self-confirming equilibrium, experiment

∗

Corresponding author (Department of Economics, Management and Statistics, University of

Milan-Bicocca, Piazza dell’Ateneo Nuovo 1, 2016, Milan, Italy. Phone: +390264483092. E-mail:

astrid.gamba@unimib.it).

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Jena Economic Research Papers 2015 - 012

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Introduction

In many strategic interactions, the level of uncertainty that players face about the

opponent’s behavior might...