Eyetracking behavioural strategies in beauty contest games

Marc Willinger is professor of economics at the University of Montpellier (UM) and member of the Center for Environmental Economics of Montpellier (CEE-M). His main research area is experimental and behavioral economics. His research relies mainly on laboratory and field experiments to study risk taking and social preferences in the context of social dilemmas and asymmetric information. His current research interests are on local adaptation to a risky environment and on trading behavior in experimental asset markets, with a focus on socially responsible investments.

We study experimentally two variants of the beauty contest game (BCG+ and BCG-, thereafter) with an interior equilibrium. Subjects choose an integer number between 1 and 100. The winner is the one whose chosen number is closest to 2/3×(mean+30) in BCG+ or 100-2/3×mean in BCG-. For both games, the unique equilibrium, assuming IEWDS, is 60. The key difference between the two elimination processes is alternation. Under positive feedback elimination occurs only on one side of the equilibrium point, either the upper side or the lower side, depending at which extremity of the interval the reasoning process is initiated. In contrast, under negative feedback, elimination alternates on both sides of the equilibrium point, whatever the extremity that is chosen as the starting point. We use eye-tracking to identify whether subjects rely on one-sided elimination under BCG+ and two-sided elimination with alternation under BCG-N.B.