Revisiting the Intra-Team Communication Method to Elicit Level-k Reasoning in Beauty Contests and 11-20 Games

Abstract

How level-0 players behave and how they are perceived by higher-level players are central questions in the literature on level-k models of boundedly rational strategic reasoning. To study these twin questions, we apply the intra-team communication method developed by Burchardi and Penczynski (2014) to identify level-0 actions and beliefs in the canonical beauty contest game and in a variant of the 11-20 game of Goeree et al. (2018), in which behavior appears inconsistent with the standard level-k model. In the beauty contest game, we replicate Burchardi and Penczynski (2014)'s finding that elicited level-0 beliefs align with observed level-0 actions. In the variant of the 11-20 game, however, elicited level-0 beliefs and observed level-0 actions diverge, and both depart from the standard level-0 assumption, suggesting a complementary explanation for the behavioral pattern documented by Goeree et al. (2018).