CeDEx Brown Bag Seminar - Xiaoyu Zhou

Title: Market Selection of Strategic Thinking Types

Abstract:  Markets are often used to allocate decision-making, from selecting voting rights of shareholders to hiring workers in the gig economy.  We study how market selection can influence the composition of strategic thinking types in strategic interactions. Using auctions as the selection mechanism, we demonstrate that after-market decisions in the $p$-Beauty Contest Game can result in either higher or lower numbers, depending on the incentives. Furthermore, we pinpoint the cause of differences to the market selection of strategic thinking types, rather than the decision-maker altering behaviour due to beliefs about the selection of other players. This highlights the role of institutional factors in determining  “who plays the game”.