Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209694 
Year of Publication: 
2017
Citation: 
[Journal:] Discrete Dynamics in Nature and Society [ISSN:] 1607-887X [Article No.:] 2768045 [Publisher:] Hindawi [Place:] London [Year:] 2017 [Pages:] 1-8
Publisher: 
Hindawi, London
Abstract: 
Existing models of nonrenewable resources assume that sophisticated agents compete with other sophisticated agents. This study instead uses a level-k approach to examine cases where the focal agent is uncertain about the strategy of his opponent or predicts that the opponent will act in a nonsophisticated manner. Level-0 players are randomized uniformly across all possible actions, and level-k players best respond to the action of player k - 1. We study a dynamic nonrenewable resource game with a large number of actions. We are able to solve for the level-1 strategy by reducing the averaging problem to an optimization problem against a single action. We show that lower levels of strategic reasoning are close to the Walras and collusive benchmark, whereas higher level strategies converge to the Nash-Hotelling equilibrium. These results are then fitted to experimental data, suggesting that the level of sophistication of participants increased over the course of the experiment.
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Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version

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