Abstract:

We analyze behavior of an experiment on the repeated centipede game played in the reduced normal form. In this game 2 players decide simultaneously when to split a cake. The longer both players wait, the higher the total gain for both. The player who is less patient to wait obtains the larger share of the pie while the other obtains the lower share of the pie. In all standard game theoretic predictions the outcome is that the pie is split immediately. We compare several static models and ouantative learning models, among them quantal response, reinforcement models and fictitious play. Furthermore, we structure behavior from period to period according to a simple cognitive process, called learning direction theory. It is shown that there is a significant difference in behavior whether a player has observed that he got the larger share of the pie or whether he got the smaller share of the pie.

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