Materials: A reading list is available.
Behavioral game theory combines theory and empirical (mainly experimental) evidence to develop the understanding of strategic behavior needed to analyze economic, political, and social interactions. This understanding includes issues in behavioral decision theory such as present-biased or reference-dependent preferences and biases in probabilistic judgment, plus some issues that arise only in multi-person settings such as altruism, envy, reciprocity, and spite. It also includes purely strategic issues such as strategic thinking as revealed by people’s initial responses to games, the structure of learning rules, and how the two interact to determine the dynamics and limiting outcomes of their interactions. The master class will narrow the focus to strategic thinking, taking behavior as (mostly) self-interested and rational. It will be seen that experimental subjects’ initial responses to games often deviate systematically from equilibrium, but that there are common elements in their deviations that make it possible to construct structural non-equilibrium models that consistently out-predict equilibrium.
Topics include the design of laboratory experiments to study strategic thinking, the use of econometric and other methods to analyze decision and process data, the lessons for modeling of initial responses to games, and the use of the resulting models to resolve empirical and theoretical puzzles that have resisted analysis via equilibrium, quantal response equilibrium, and related methods.