arXiv subjects

Duarte Gonçalves

Publications and source records attributed to Duarte Gonçalves.

7 recordsLinked to original sources

arXiv2026

Speed, Accuracy, and Complexity

This paper studies when response time is informative about problem complexity. It revisits a canonical sequential-sampling model in which a decision-maker chooses when to stop acquiring costly information. Problem complexity is measured by the noise-to-signal ratio of the evidence process. Under exogenous stopping rules -- as when the decision-maker does not optimally adjust to problem complexity -- response time increases with complexity. By contrast, this monotonicity breaks down when the decision-maker observes problem complexity ex ante and optimally adjusts to it. Expected stopping time is then inverse-U-shaped in complexity, so choices are fast in both very simple and very complex problems. Ability and response time are similarly ambiguously related: more able decision-makers are faster on simple problems but slower on complex ones. Finally, this paper shows that complexity and ability can be inferred from the sensitivity of choices to subsidies, which is greater in more complex problems and for less able decision-makers.

econ.TH↗

arXiv2026

Incentives and Strategic Behaviour: An Experiment

How do incentive levels affect strategic behaviour? We address this with an experiment that separately identifies own- and opponent-incentive effects in two dominance-solvable games that differ in strategic complexity. Higher own incentives favour more strategically sophisticated actions and increase best responding to stated beliefs. Beliefs shift in a parallel direction and participants expect more sophisticated opponent actions. Furthermore, while higher own incentives increase belief accuracy, opponents with higher incentives are harder to predict. Higher incentives also increase response times, and longer response times are associated with better performance and more sophisticated actions and beliefs. Taken together, the evidence suggests that incentives affect strategic behaviour through two main channels: by reducing payoff-dependent mistakes and by increasing the effort devoted to reasoning, with the returns to that effort shaped by strategic complexity of the environment.

econ.TH↗

arXiv2025

Retractions: Updating from Complex Information

We modify a canonical experimental design to identify the effectiveness of retractions. Comparing beliefs after retractions to beliefs (a) without the retracted information and (b) after equivalent new information, we find that retractions result in diminished belief updating in both cases. We propose this reflects updating from retractions being more complex, and our analysis supports this: we find longer response times, lower accuracy, and higher variability. The results -- robust across diverse subject groups and design variations -- enhance our understanding of belief updating and offer insights into addressing misinformation.

econ.GN↗

arXiv2024

Statistical Mechanism Design: Robust Pricing, Estimation, and Inference

This paper tackles challenges in pricing and revenue projections due to consumer uncertainty. We propose a novel data-based approach for firms facing unknown consumer type distributions. Unlike existing methods, we assume firms only observe a finite sample of consumers' types. We introduce \emph{empirically optimal mechanisms}, a simple and intuitive class of sample-based mechanisms with strong finite-sample revenue guarantees. Furthermore, we leverage our results to develop a toolkit for statistical inference on profits. Our approach allows to reliably estimate the profits associated for any particular mechanism, to construct confidence intervals, and to, more generally, conduct valid hypothesis testing.

econ.TH↗

arXiv2024

Quantal Response Equilibrium with a Continuum of Types: Characterization and Nonparametric Identification

Quantal response equilibrium (QRE), a statistical generalization of Nash equilibrium, is a standard benchmark in the analysis of experimental data. Despite its influence, nonparametric characterizations and tests of QRE are unavailable beyond the case of finite games. We address this gap by completely characterizing the set of QRE in a class of binary-action games with a continuum of types. Our characterization provides sharp predictions in settings such as global games, volunteer's dilemma, and the compromise game. Further, we leverage our results to develop nonparametric tests of QRE. As an empirical application, we revisit the experimental data from Carrillo and Palfrey (2009) on the compromise game.

econ.TH↗

arXiv2023

Sequential Sampling Equilibrium

This paper introduces an equilibrium framework based on sequential sampling in which players face strategic uncertainty over their opponents' behavior and acquire informative signals to resolve it. Sequential sampling equilibrium delivers a disciplined model featuring an endogenous distribution of choices, beliefs, and decision times, that not only rationalizes well-known deviations from Nash equilibrium, but also makes novel predictions supported by existing data. It grounds a relationship between empirical learning and strategic sophistication, and generates stochastic choice through randomness inherent to sampling, without relying on indifference or choice mistakes. Further, it provides a rationale for Nash equilibrium when sampling costs vanish.

econ.TH↗

arXiv2023

The Dynamics of Instability

We study a model in which two players with opposing interests try to alter a status quo through instability-generating actions. We show that instability can be used to secure longer-term durable changes, even if it is costly to generate and does not generate short-term gains. In equilibrium, instability generated by a player decreases when the status quo favors them more. Equilibrium always exhibits a region of stable states in which the status quo persists. As players' threat power increases, this region shrinks, ultimately collapsing to a single stable state that is supported via a deterrence mechanism. There is long-run path-dependency and inequity: although instability eventually leads to a stable state, it typically selects the least favorable one for the initially disadvantaged player.

econ.TH↗