Understanding Reasoning Using Utility Proportional Beliefs

Abstract. Traditionally very little attention has been paid to the reasoning pro-cess that underlies a game theoretic solution concept. When modeling bounded rationality in one-shot games, however, the reasoning process can be a great source of insight. The reasoning process itself can provide testable assertions, which pro-vide more insight than the fit to experimental data. Based on Bach and Perea’s [1] concept of utility proportional beliefs, we analyze the players ’ reasoning process and find three testable implications: (1) players form an initial belief that is the basis for further reasoning; (2) players reason by alternatingly considering their own and their opponent’s incentives; (3) players perform only several rounds of deliberate reasoning