Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209694
Authors: 
Vierhaus, Ingmar
Veldhuizen, Roel van
Fügenschuh, Armin
Year of Publication: 
2017
Citation: 
[Journal:] Discrete Dynamics in Nature and Society [ISSN:] 1607-887X [Publisher:] Hindawi [Place:] London [Year:] 2017 (Article ID 2768045) [Pages:] 1-8
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.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
Document Version: 
Published Version

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