Levels of reasoning between students: An experiment on level-k

Abstract

Bosch-Domenech et al. (2002) designed a very powerful model to study the levels of reasoning of subjects, and up to which point they can iterate their thinking. I adapted this framework to study the differences in reasoning between business students and economics students. I hypothesized about the degree of reasoning of each type of student and ran an experiment in my faculty. Subjects were asked to solve an adapted version of the Keynesian beauty contest game. I compared the responses of business students against the responses of economics students. No significant difference was found in their pattern of responses. However, there is a large number of observations of business students in the last level of reasoning of my experiment. This supports the hypothesis that business students solved the game by iterated dominance. I also provide a brief discussion about other factors that could drive different responses in the game such as gender, language of the class, game theory knowledge of the subject and nationality.