Epistemic Experiments: Utilities, Beliefs, and Irrational Play†

Inspired by the epistemic game theory framework, I elicit subjects’ preferences over outcomes, beliefs about strategies, and beliefs about beliefs in a variety of simple games. I find that the prisoners’ dilemma and the traditional centipede game are both Bayesian games, with many non-selfish types. Many players choose strategies that are clearly inconsistent with their elicited beliefs and preferences. But these instances of “irrationality” disappear when the game is made sequential and the player moves second, suggesting that irrationality is driven by the presence of strategic uncertainty.