Behavioral Game Theory, Experimental Economics

As personal finances are constantly changing their form, the platforms for wealth management have emerged as great
instruments that give their users more and more space to manage their investments independently. However, due to
cognitive biases, investor decision-making is often hindered, for instance, overconfidence, loss aversion and present
bias which lead to suboptimal results. This article examines how behavioural economics -the use of “nudges”- can be
tactically employed to design digital wealth management platforms that will encourage better investment behaviour.
Based on the pioneering work of Thaler and Sunstein, nudging is a nudge to choice architecture that subtly changes
that point individuals towards the right choices without reducing their freedom of choice. Within the phenomenon of
wealth management, such nudges can be default portfolio allocations, warning signs about volatility in the market,
personalised goal-setting modules, and framing techniques that reorient the perception of risk and return.
The article synthesises recent literature on behavioural finance and digital interface design to submit a structured
framework to insert nudges in investment platforms. It also appraises the practical deployments from robo-advisors
and fintech startups and assesses their efficacy in enriching user outcomes. Emphasis is given to ethical considerations
including transparency, and autonomy, where a nudge improves investor welfare without manipulation.
Overall, the paper concludes that synthesising behavioural insights to platform architecture is a promising horizon in
the democratisation of financial advisory work and the enhancement of long-term financial investor results. With
expanding numbers of digital wealth tools, the ability to recognize the psychology of decision-making and use it to
your advantage is no longer an advantage but a necessity.

land use change (lUc) alters habitat quality and the provision of eco
system services that affect economic activities, such as beekeeping.
For beekeeping, landscapes reveal individual decisions that determine
its productive potential, thus, landscapes can be considered a com
mon pool resource. to understand how land use preferences shape
scenarios that suggest the aggregated effects of decisions on bee
keeping in agricultural landscapes, a participatory valuation and an
economic choice game were conducted in field workshops in Veracruz,
México. we found that, although participants valued land use benefits
differently, they integrated common benefits to create scenarios that
sustained beekeeping, but these decisions were sensitive to external
factors that disincentivize collective action. in addition, characteristics
positively associated with collective action at the individual and group
levels differ, suggesting emerging group identities. exercises like these
allow the exploration of cPr in complex scenarios such as landscapes,
to understand the dynamics of individual and group preferences.

This paper presents experimental evidence demonstrating that agents' knowledge of strategy alternatives in pure coordination games is inversely correlated with decision-making efficacy. Alternative theoretical accounts of players' choice processes in coordination games are considered to shed light on our empirical results.

Simulations and games bring the possibility to research complex processes of managerial decision-making. However, this modern field requires adequate methodological procedures. Many authors recommend the use of a combination of concurrent think-aloud (CTA) or retrospective think-aloud (RTA) with eye-tracking to investigate cognitive processes such as decision-making. Nevertheless, previous studies have little or no consideration of the possible differential impact of both think-aloud methods on data provided by eye-tracking. Therefore, the main aim of this study is to compare and assess if and how these methods differ in terms of their impact on eye-tracking. The experiment was conducted for this purpose. Participants were 14 managers who played a specific simulation game with CTA use and 17 managers who played the same game with RTA use. The results empirically prove that CTA significantly distorts data provided by eye-tracking, whereas data gathered when RTA is used, provide indep...

This paper reports a construction of typologies of players based on their strategic reasoning in turn-taking games. Classifications have been done based on latent class analysis and according to different orders of theory of mind, and exploratory validations have been provided for the resulting classifications. Finally, interaction of the typologies described by these classifications is discussed towards achieving a common perspective of typologies of players originating from various aspects of strategic thinking.

This paper reports a construction of typologies of players based on their strategic reasoning in turn-taking games. Classifications have been done based on latent class analysis and according to different orders of theory of mind, and exploratory validations have been provided for the resulting classifications. Finally, interaction of the typologies described by these classifications is discussed towards achieving a common perspective of typologies of players originating from various aspects of strategic thinking.

This paper reports a construction of typologies of players based on their strategic reasoning in turn-taking games. Classifications have been done based on latent class analysis and according to different orders of theory of mind, and exploratory validations have been provided for the resulting classifications. Finally, interaction of the typologies described by these classifications is discussed towards achieving a common perspective of typologies of players originating from various aspects of strategic thinking.

The life of Tatiana Maksimovna Birshtein, an outstanding St. Petersburg polymer scientist (1928‒2022), and her family. It begins in the 19th Century and continues to the present, including the problems of Jews in Imperial Russia, the political purges in the 1930s that affected the life of Tatiana Maksimovna’s aunt Maria (also Mary) Birshtein, an internationally recognized economist, and some other relatives, anti-Semitic laws in Germany in the 1930s that affected the life of her other aunt Vera Birstein, a prominent chemist, the emigration of some relatives to the United States, the Leningrad Siege, and Stalin’s anti-Semitic campaign in the late 1940s-early 1950s. In 2007, Tatiana Maksimovna was awarded the L'Oréal-UNESCO International Prize "For Women in Science" "for her contribution to the understanding of shapes, sizes, and movement of large molecules.”

This paper deals with strategic behavior of people, we observed from experiments. The research question, formulated in this work, is how players (mainly children) learn in complex strategic situations which they never faced before. We examine data from different games, played during popular lectures about game theory and present findings about players progress in strategic learning while competing with other players. Four “pick a number” games were investigated, all with similar-looking rules but very different properties. These games were introduced to very different groups of listeners. The data gathered is available in open repository for replication and analysis. In the work we analyse data and propose the agent-based model of beauty contest game, explaining observed behavior. Finally, we discuss the findings propose hypothesis to investigate and formulate open questions for future research.

Simulations and games bring the possibility to research complex processes of managerial decision-making. However, this modern field requires adequate methodological procedures. Many authors recommend the use of a combination of concurrent think-aloud (CTA) or retrospective think-aloud (RTA) with eye-tracking to investigate cognitive processes such as decision-making. Nevertheless, previous studies have little or no consideration of the possible differential impact of both think-aloud methods on data provided by eye-tracking. Therefore, the main aim of this study is to compare and assess if and how these methods differ in terms of their impact on eye-tracking. The experiment was conducted for this purpose. Participants were 14 managers who played a specific simulation game with CTA use and 17 managers who played the same game with RTA use. The results empirically prove that CTA significantly distorts data provided by eye-tracking, whereas data gathered when RTA is used, provide indep...

It is known that people do not merely consider their interests but also have been thinking about other people with empathy in making decisions since the very first day of their existence. This type of positive social behavior is considered as altruism, empathy and love toward others. Altruistic behaviors, exhibited without expecting a reward or something in return, prioritize the benefit of the others. Although mainstream economics mentions individuals maximizing their own interests, any behavior that will increase the welfare of the other regardless of interest is essentially an economic action. The aim of the study is to investigate the behaviors of Ottoman waqf founders in favor of others or non-selfish behaviors in terms of altruistic features based on behavioral economics games and concepts. After all, it was determined that empathy-induced altruistic behavior that emerged in the ultimatum, dictator, trust and public good games, were the same as the waqf founders’ altruistic behaviors.

Öz: İnsanların var oldukları ilk günden beri aldıkları kararlarda sadece kendi faydalarını gözetmedikleri empati kurarak diğer insanları da düşündükleri bilinmektedir. Bu tarz olumlu sosyal davranışlar alturizm, empati ve başkalarını sevmek olarak değerlendirilmektedir. Alturizm olarak da kavramsallaştırılan ödül veya karşılık beklemeden sergilenen ve kişinin bir bedel ödeyebileceği alturistik davranış, diğerinin faydasını öncelemektedir. Ana akım iktisat bireylerin kendi çıkarlarını maksimize etmesinden bahsetmesine rağmen, çıkar gözetmeden diğerinin refahını arttıracak her türlü davranış da özünde iktisadi bir eylemdir. Çalışmanın amacı Osmanlı vakıf kurucularının başkalarının çıkarını gözeten veya bencil olmayan davranışlarını davranışsal iktisat oyunları ve kavramlarından yola çıkarak alturistik özellikler açısından araştırmaktır. Sonuç olarak, ültimatom, diktatör, güven ve kamu malı oyunlarında ortaya çıkan empatiye bağlı alturistik davranışın vakıf kurucularının alturistik davranışlarıyla aynı olduğu belirlenmiştir.

In social contexts, we refer to strategic sophistication as the ability to adapt our own behavior based on the possible actions of others. In the current study, we explore the role of other-oriented attention and cognitive reflection in explaining heterogeneity in strategic sophistication. In two eye-tracking experiments, we registered eye movements of participants while playing matrix games of increasing relational complexity (2x2 and 3x3 matrices), and we analyzed individual gaze patterns to reveal the ongoing mechanisms of integration of own and others' incentives in the current game representation. Moreover, participants completed the Cognitive Reflection Test (CRT), in addition to alternative measures of cognitive ability. In both classes of games, higher cognitive reflection levels specifically predict the ability to incorporate the counterpart's incentives in the current model of the game, as well as higher levels of strategic sophistication. Conversely, players exhibiting low cognitive reflection tend to pay less attention to relevant transitions between the counterpart's payoffs, and such incomplete visual analysis leads to out-of-equilibrium choices. Gaze patterns appear to completely mediate the relationship between cognitive reflection and strategic choices. Our results shed new light on the cognitive factors driving heterogeneity in strategic thinking and on theories of bounded rationality.

In social contexts, we refer to strategic sophistication as the ability to adapt our own behavior based on the possible actions of others. Growing experimental evidence has shown that players implement different levels of sophistication in games, as described by hierarchical models of strategic thinking such as Level-k and Cognitive Hierarchy. In the current study, we explore the role of two cognitive factors – game representation and cognitive reflection - in explaining heterogeneity in strategic behavior. In particular, we hypothesize that higher levels of cognitive reflection specifically predict the implementation of more sophisticated processes of game representation, which in turn explains higher levels of strategic sophistication. In two eye-tracking experiments, we registered eye movements of participants while playing matrix games of increasing relational complexity (2x2 and 3x3 matrices), and we analyzed individual patterns of information acquisition to reveal the ongoing process of game representation-building. In order to assess individual levels of cognitive reflection, participants completed the Cognitive Reflection Test (CRT), among different control measures of cognitive ability.
Results show that, in both classes of games, higher cognitive reflection levels specifically predicted the ability to incorporate the counterpart’s incentives in the model of the current game, as well as higher levels of strategic sophistication. Conversely, players exhibiting low cognitive reflection disregarded relevant transitions between the payoffs of the counterpart, and such incomplete visual analysis led to out-of-equilibrium choices. The relationship between cognitive reflection and strategic choices was completely mediated by gaze patterns. Our results shed new light on the cognitive factors driving heterogeneity in strategic thinking, and on theories of bounded rationality.

We run an eye-tracking experiment to investigate whether players change their gaze patterns and choices after they experience alternative models of choice in one-shot games. In Phase 1 and 3, participants play 2x2 matrix games with a human counterpart, while in Phase 2 they are asked to apply specific decision rules while playing with a computer algorithm with known behavior. We classify participants in types based on their gaze patterns in Phase 1, and explore attentional shifts in Phase 3, after players were exposed to alternative decision rules.

To investigate the influence of the sense of psychological power on decision making under risk, we conducted an experiment with 60 participants and found evidence which suggests that a heightened sense of power results in excessive risk-taking. We primed the experimental group with a high-power mindset and the control group with a neutral mindset and asked participants to answer a series of hypothetical questions on expected value. The results of a chi-square test suggest that participants who were primed with a heightened sense of power focus on high but unlikely rewards. When the potential reward was greater than the loss, power-primed people were swayed towards the rewards despite the unfavorable probabilities. We propose that there is a link between a heightened sense of power and suboptimal economic decision making, and model this in the Prospect Theory framework.

P versus NP ( Clay's Millennium Prize Problem) is a major unsolved problem of computer science and mathematics. Ethnographic experiment ( nonclassical quantum - like game) was used in order to establish statistically  valid confirmation on an existence of counterexample for P v NP problem in the form of new complexity class M. Thus, phenomenon of existence of absolute winners in nonclassical game can provide alternative solution when P is not NP, but nevertheless, there must exist M = NP as well as P = M! Result was published in 2009 in agreement with Los Alamos scientific standard at :www. arXiv.org > cs > 0904.3074.

Rational deterministic normative models consider that the market agents are possessed with unlimited time and knowledge and discard the underlying cognitive processes behind decision-making. Conversely, decision field theory implements a dynamic approach to decision processes under uncertainty, explaining systematic relations between variability of preferences and time constraints. Besides the theory mentioned above, adaptive toolbox model further advances decision-making processes by a composition of heuristics and adaptation to the environment structure. The hypotheses from these models are assessed in the eye tracking experiment which is conducted using the information stimulus from three main stock marketplaces, e.g. the Deutsche Börse, the London Stock Exchange, and the NASDAQ. The participants made their decisions between buying or short selling stocks.  The author examines the dynamics of processing complex and excessive financial information provided by web-based stock marketplaces in regards to a particular stock in the thesis. The experiment investigates the dynamics of the participants’ attention to the particular information content in the decision-making process and identifies the heuristics behind the decision process and how they are affected by time constraints. In this research, involving the measure of attention, the author observed that participants did not rely on the deliberative processing of information under time constraints but rather than on a collection of simple heuristics. The results indicate that the content of the particular information under the natural complexity of the provided financial information impacts the decision-making process of participants under both time conditions.

Social situations can be modeled as games with payoff struc- tures. The complexity of the situation emerges from the pattern of pay- offs. Inferring the outcome of the game from the payoff matrix is the conventional approach to describing, predicting or prescribing behaviour of participants. This approach makes a strong assumption of rationality of the players and suffers from other drawbacks as well. While Nash (8) proved a mixed equilibrium always exists, this appealing universality comes at a price. Mixed equilibria are not a natural and credible model of decision-making behaviour. Indeed, it has been shown that efficient algorithms to compute mixed equilibria likely do not exist for all games. (3) The pure Nash equilibrium, a more appealing model of behaviour, fails on universality: a subset of games - and a growing proportion as the number of players and choices increases - do not possess a pure Nash equilibrium. Miller (5),(6) describes unpublished research in which he took a ...

We examine the strategic sophistication of adolescents, aged 10 to 17 years, in experimental normal-form games. Besides making choices, subjects have to state their first-and secondorder beliefs. We find that choices are more often a best reply to beliefs if any player has a dominant strategy and equilibrium payoffs are not too unequal. Using a mixture model we can estimate for each subject the probability to be any of eight different strategic and non-strategic types. The econometric estimation reveals that older subjects are more likely to eliminate dominated strategies, and that subjects with good math grades are more strategic.

The paper explores the disjunction effect in the Prisoner's dilemma game using behavioral experiments with eyemovement recordings. An experiment was designed to explore the complexity hypothesis about the appearance of the disjunction effect. The results show that in games with payoffs which are simpler to perceive and compare, the disjunction effect disappears, while it is present when more complex payoffs are used. In a second experiment, the participants were told that the moves of the computer opponent had been ...

We use eye-tracking technique to test whether players’ actions are consistent with their expectations of their opponent’s behavior. Participants play a series of two-player 3 by 3 one shot games and state their beliefs about which actions they expect their counterpart to play (first-order beliefs) or about which actions their counterparts expect them to play (second-order beliefs). We perform a mixed model cluster analysis and classify participants into types according to both their information search patterns and choices. Players classified as strategic (Level-2 players) and players classified as having other regarding preferences like Inequity aversion and Prosociality exhibit attentional patterns of visual information acquisition and choices that are mainly consistent with their stated beliefs. Conversely, players classified as non-strategic (Level-1, Pessimistic, Optimistic and Competitive) do not best respond to any specific belief, but apply simple decision rules regardless of whether they are playing or stating their beliefs. Thus, using eye-tracking data we could identify a larger consistency between actions and stated beliefs compared with previous studies, and we could characterize the behavioral rules associated with choice-beliefs inconsistency. Implications for the theories of bounded rationality are discussed.

We used eye-tracking to measure the dynamic patterns of visual information acquisition in two players normal form games. Participants played one-shot games in which either, neither, or only one of the players had a dominant strategy. First, we performed a mixture models cluster analysis to group participants into types according to the pattern of visual information acquisition observed in a single class of games. Then, we predicted agents’ choices in different classes of games, and observed that patterns of visual information acquisition were game invariant. Our method allowed us to predict whether the decision process would lead to equilibrium choices or not, and to attribute out-of-equilibrium responses to limited cognitive capacities or social motives. Our results suggest the existence of individually heterogeneous-but stable-patterns of visual information acquisition based on subjective levels of strategic sophistication and social preferences.

We analyze subjects' eye movements while they make decisions in a series of one-shot games. The majority of them perform a partial and selective analysis of the payoff matrix, often ignoring the payoffs of the opponent and/or paying attention only to specific cells. Our results suggest that subjects apply boundedly rational decision heuristics that involve best responding to a simplification of the decision problem, obtained either by ignoring the other players' motivations or by considering them only for a subset of outcomes.

This study investigates strategies in reasoning about mental states of others, a process that requires theory of mind. It is a first step in studying the cognitive basis of such reasoning, as strategies affect tradeoffs between cognitive resources. Participants were presented with a two-player game that required reasoning about the mental states of the opponent. Game theory literature discerns two candidate strategies that participants could use in this game: either forward reasoning or backward reasoning.

The paper explores the disjunction effect in the Prisoner's dilemma game using behavioral experiments with eyemovement recordings. An experiment was designed to explore the complexity hypothesis about the appearance of the disjunction effect. The results show that in games with payoffs which are simpler to perceive and compare, the disjunction effect disappears, while it is present when more complex payoffs are used. In a second experiment, the participants were told that the moves of the computer opponent had been made before the game session. This manipulation led again to the disappearance of the disjunction effect even. We interpret this result as a suppressing of a possible quasi-magic reasoning by stressing the fact that participants' own moves cannot influence the move of the opponent. The results from the experiments point to information processing complexity as a major factor for the disjunction effect contrary to the conclusions in some previous research.