Please use this identifier to cite or link to this item: https://doi.org/10.1287/mnsc.1120.1645
Title: A dynamic level-K model in sequential games
Authors: Ho, T.-H. 
Su, X.
Keywords: Backward induction
Behavioral game theory
Learning
Level-k models
Sequential games
Issue Date: 2013
Source: Ho, T.-H., Su, X. (2013). A dynamic level-K model in sequential games. Management Science 59 (2) : 452-469. ScholarBank@NUS Repository. https://doi.org/10.1287/mnsc.1120.1645
Abstract: Backward induction is a widely accepted principle for predicting behavior in sequential games. In the classic example of the "centipede game," however, players frequently violate this principle. An alternative is a "dynamic level-k" model, where players choose a rule from a rule hierarchy. The rule hierarchy is iteratively defined such that the level-k rule is a best response to the level-4k.15 rule, and the level-. rule corresponds to backward induction. Players choose rules based on their best guesses of others' rules and use historical plays to improve their guesses. The model captures two systematic violations of backward induction in centipede games, limited induction and repetition unraveling. Because the dynamic level-k model always converges to backward induction over repetition, the former can be considered to be a tracing procedure for the latter. We also examine the generalizability of the dynamic level-k model by applying it to explain systematic violations of backward induction in sequential bargaining games. We show that the same model is capable of capturing these violations in two separate bargaining experiments. © 2013 INFORMS.
Source Title: Management Science
URI: http://scholarbank.nus.edu.sg/handle/10635/43841
ISSN: 00251909
DOI: 10.1287/mnsc.1120.1645
Appears in Collections:Staff Publications

Show full item record
Files in This Item:
There are no files associated with this item.

SCOPUSTM   
Citations

13
checked on Dec 14, 2017

WEB OF SCIENCETM
Citations

10
checked on Nov 17, 2017

Page view(s)

81
checked on Dec 10, 2017

Google ScholarTM

Check

Altmetric


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.