ESSAYS ON FORWARD-LOOKING BEHAVIOR IN STRATEGIC INTERACTIONS

The general topic of our thesis is forward looking behavior in strategic situations. Mixing theoretical and experimental analysis, we document how strategic thinking is affected by the specific features of a dynamic interaction. The overarching result is that the information regarding decisions that are close to the current one, receive a qualitatively different consideration, with respect to distant ones. That is, the actual decisions are based on reasoning over a limited number of steps, close to actual decison node. We capture this feature of behavior both in a strategic (limited backward induction) and in a non-strategic (limited farsightedness) set up, and we identify relevant consequences on the outcome of the interaction, which powerfullly explain many observed experimental regularities.