Adam Smith Business School

Professor Amanda Friedenberg (University of Michigan)

From Anchors to Hierarchies: Identifying Levels of Reasoning in Games (joint with Brandenburger and Kneeland)
Tuesday, 4 November 2025, 16:00–17:30
Room 386AB, Adam Smith Business School

Abstract

The level-k model has become a prominent lens through which experimenters have assessed players’ reasoning in games. This paper examines the extent to which the level-k model can provide evidence of bounded reasoning. In the unrestricted inference problem—where the analyst only observes the strategy played and is not prepared to make auxiliary assumptions about players’ beliefs—the level-k classification may lead the analyst to overestimate the extent to which there is bounded reasoning. But, importantly, we show that the same conclusion follows in a restricted inference problem—where the analyst is prepared to make an auxiliary assumption that the players’ hierarchies of beliefs are generated by a particular anchor. In particular, we show that, when the players’ hierarchies of beliefs are generated by a particular anchor, the behavior consistent with rationality and mth-order belief of rationality coincides with the (m+1) rationalizable strategies. Thus, the level-k model may view particular behavior as reflective of bounded reasoning despite the fact that it is consistent with unbounded reasoning, even when the analyst is prepared to assume hierarchies of beliefs are consistent with one particular anchor. The paper goes on to explore what can be inferred about reasoning from the level-k model.

Biography

Amanda Friedenberg is a Professor of Economics at the University of Michigan. Previously, she held positions at the University of Arizona, Arizona State University, and Washington University in St. Louis. Amanda ’s research focuses on game theory, political economy and experimental economics. From 2021-2024, Amanda served as Managing Editor at the Economic Journal. Since 2017, she has served as an Associate Editor at Econometrica. She held previous Associate Editor positions at the Journal of Economic Theory, Theoretical Economics, and the International Journal of Game Theory. Amanda is a fellow of the Society for Advancement of Economic Theory and is on the Council of the Game Theory Society.

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First published: 21 October 2025