Depth of Reasoning and Information Revelation: An Experiment on the Distribution of k-Levels

Abstract

The level-[Formula: see text] model is a workhorse in behavioral game theory. For comparisons across experiments and predictions in future studies, it is crucial to assess the empirical distribution of [Formula: see text]-levels. We present a revelation game suitable for this purpose. In a labor market context, workers can choose to reveal their productivity at a cost, and players’ strategies reveal their level of reasoning in terms of a [Formula: see text]-level. We find that the most frequently observed reasoning levels are [Formula: see text] and [Formula: see text]. In our game roughly 30% of the players are [Formula: see text] and 25% are [Formula: see text]. We compare our results to other experiments that identify level-[Formula: see text] distribution, foremost to the money request (or 11–20) game. Despite various differences to the 11–20 game, our revelation game suggests a very similar distribution of level-[Formula: see text] types.