Noisy Introspection in the ”11-20″ Game
Jacob Goeree (University of Zurich, Zwitserland)

Arad and Rubinstein (American Economic Review, 102(7), 2012, 3561{3573) recently proposed a simple money-request game designed to trigger level-k reasoning. In an experiment that explores three variants of the game, they find evidence for the level-k model with observed levels of strategic thinking consistently ranging from 0 to 3. Our baseline treatment uses the basic version of the money-request game and replicates their results. We apply the noisy introspection model developed by Goeree and Holt (Games and Economic Behavior, 46, 2004, 365{382) to the baseline-treatment data and use this to predict behavior and beliefs in five other treatments that employ games with a very similar structure. The data from these additional treatments clearly refute the level-k model, which predicts no better than the Nash equilibrium in these games. Our data provide striking evidence that the assumption of best-response behavior underlying the level-k model is untenable. The noisy introspection model, which instead assumes “common knowledge of noise,” predicts behavior remarkably well. Joint with Philippos Louis and Jingjing Zhang.

Performance and Relative Incentive Pay: The Role of Social Preferences 
Dana Sisak (Erasmus University Rotterdam)

Under relative performance pay, other-regarding workers internalize the negative externality they impose on other workers. In one form—increased own effort reduces others’ payoffs—this results in other-regarding individuals depressing efforts. In another form—punishment reduces the payoff of other workers—groups with other-regarding individuals feature higher efforts because it is more difficult for these individuals to sustain low-effort (collusive) outcomes. We explore these effects experimentally and find other-regarding workers tend to depress efforts by 15% on average. However, selfish workers are nearly three times more likely to lead workers to coordinate on minimal efforts when communication is possible. Hence, the social preferences composition of a team of workers has nuanced consequences on efforts. (Joint with Pablo Hernandez and Dylan Minor).