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Indirect higher order beliefs and cooperation

Published online by Cambridge University Press:  14 March 2025

Jiabin Wu Open the ORCID record for Jiabin Wu [Opens in a new window]
Jiabin Wu*
Affiliation:
Department of Economics, University of Oregon, 515 PLC, 1285 University of Oregon, Eugene, OR 97403, USA
*
[email protected]
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Abstract

This study experimentally examines the role of indirect higher order beliefs in sequential psychological games. We consider a three-player sequential game in which the first and third players do not interact sequentially, but only through an intermediary, the second player. We posit that the third player’s decision to cooperate depends on his indirect higher order belief, namely, his belief about what the first player believes the second player would choose. We employ pre-play communication between the first and third players as a way to influence the third player’s indirect higher order belief. The evidence demonstrates that communication can effectively induce cooperation from the third player by shaping his indirect higher order belief.

Keywords

Indirect higher order beliefsPsychological game theorySequential reciprocityCommunicationBehavioral economicsExperimental economics

JEL classification

C91: Laboratory, Individual Behavior D83: Search • Learning • Information and Knowledge • Communication • Belief • Unawareness C72: Noncooperative Games
Type
Original Paper
Information
Experimental Economics , Volume 21 , Issue 4 , December 2018 , pp. 858 - 876
Copyright
Copyright © 2017 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-017-9555-y) contains supplementary material, which is available to authorized users.

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