The Role of Context and Team Play in Cross-Game Learning

One of the dividing lines between economics and psychology experiments is that economists favor abstract context while psychologists favor meaningful context. We investigate the effects of meaningful versus abstract context on cross-game learning in a signaling game experiment. With individual decision makers (1x1 games) meaningful context promotes positive cross-game learning in moving from a pooling equilibrium to a separating equilibrium, while abstract context yields negative cross-game learning. In 1x1 games a change in the (meaningful) context which accompanies “superficial” changes in the game stalls the learning process compared to an abstract context that does not change. In contrast, with two person teams the same change in meaningful context has no disruptive effect on strategic play, with teams also having substantially higher levels of strategic play than the 1x1 games. We relate the effects of meaningful versus abstract context on cross-game learning to the psychology literature on deductive reasoning processes (JEL C72, C92, D82, L12). The editor in charge of this paper was Patrick Bolton Acknowledgements: Research support from the National Science Foundation (SES – 0451981) is gratefully acknowledged. Helpful research assistance has been provided by Kirill Chernomaz, John Lightle, and Susan Rose. Jo Ducey has provided valuable editorial assistance. We have received helpful comments from seminar participants at the ASSA meetings, the ESA meetings in Tucson, the IMEBE meetings in Valencia, the London School of Economics, Michigan State University, the Ohio State University, the University of Copenhagen, two referees and the editor of this journal. Any opinions, findings and conclusions or recommendations in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation. E-mail Addresses: [email protected] (Cooper); [email protected] (Kagel)