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Spiliopoulous, L. & Hertwig, R. (2019). Strategic uncertainty and incomplete information: Homo heuristicus does not fold. In R. Hertwig, T. Pleskac, T. Pachur, & the Center for Adaptive Rationality (Eds.), Taming uncertainty (pp. xx–xx). Boston, MA: MIT Press. doi:XXXXXXX

Chapter 5 Heuristics, Strategic Uncertainty, and Incomplete Information

Introduction

This element illustrates the ecological rationality of nine decision policies in strategic decision making by letting you play against each one. You can play as many games as you like; a table will keep a running score of your average payoff against each decision policy so you can compare how competitive they are.

First, choose a decision policy to play against. (You can change this policy at any point.) When the table appears, pick your action (Up, Middle, or Down) for the trial. Once you have played and seen the outcome, press "Next trial". Play 10 trials versus at least one decision policy to get your brain badge!

Choose a decision policy to play against:

Decision policy Description Played?
Maxmax Chooses the action(s) offering the highest payoff for the player
Maxmin Chooses the action(s) offering the highest worst-case payoff for the player
Social maximum Chooses the action(s) maximizing the sum of the player’s own payoff and the opponent’s payoff
Equality Chooses the action(s) minimizing the difference between the player’s own payoff and the opponent’s payoff
Dominance-1 Chooses the action(s) offering the best response to the assumption that an opponent is choosing randomly over their nondominated actions
Level-1 Chooses the action(s) offering the best response to the assumption that an opponent is choosing randomly
Level-2 Chooses the action(s) offering the best response to the assumption that an opponent is applying Level-1
Level-3 Chooses the action(s) offering the best response to the assumption that an opponent is applying Level-2
Nash equilibrium Chooses the action(s) consistent with the pure strategy Nash equilibrium (with the highest joint payoffs)

Current game

You Opponent
Left Center Right
Up loading..., loading.. loading..., loading.. loading..., loading..
Middle loading..., loading.. loading..., loading.. loading..., loading..
Down loading..., loading.. loading..., loading.. loading..., loading..

You are done with all 10 trials. You might want to try another decision policy now.

Δ You: ? Δ Opponent: ?
∑ You 0 ∑ Opponent 0

Δ: Intertrial outcome Σ: Cumulative outcome

Decision rule

:

Reward table

Trial Decision policy Δ Points you ∑ Points you Δ Points opponent ∑ Points opponent
×

Playing against opponents using different decision policies reveals the strong dependence of your payoffs on how an opponent plays. Consequently, facing strategic uncertainty–not knowing what decision policy your opponent is using–significantly complicates the game and your decision regarding how to play.

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