Comparing guessing games with homogeneous and heterogeneous players: experimental results and a CH explanation

Abstract

We investigate the decisions of individuals in simple and complex environments. We use a version of the Guessing Game (Beauty-contest Game) as a vehicle for our investigation, employing mathematically talented students.

We find that our subjects think in complex environments more carefully before making decisions. We rationalize our findings using the Cognitive Hierarchy (CH) model proposed by Camerer, Ho, and Chong (2002).

We relate our results to the emerging literature on the decision making of collective actors.