Out of your mind: Eliciting individual reasoning in one shot games

This paper investigates the reasoning process in unprecedented strategic situations. It proposes a new experimental design that allows to obtain an incentivised, written account of individual reasoning. Those reveal that the reasoning of the large majority of participants is structured as conjectured by the level-k model. We estimate that around one third of the participants play non-strategically. Comparing individual reasoning within subject between two different games we find that the level of reasoning changes across strategic situation. The results support the concept of level reasoning while shedding doubt on the model’s potential predictive power. JEL Classification: C91, D83