Error cascades in observational learning: An experiment on the Chinos game

each of which wins a fixed price if she manages to guess the total number of coins lying in everybodyʼs hands. Our evidence shows that, despite the remarkable frequency of equilibrium outcomes, deviations from optimal play are also significant. And when such deviations occur, we find that, for any given player position, the probability of a mistake is increasing in the probability of a mistake of her predecessors. This is what we call an error cascade, which we measure by evaluating the (heterogeneous) Quantal Response Equilibrium which better suits our data. We also check the robustness of our findings when we allow for belief heterogeneity by applying Kübler and Weizsäckerʼs (2004) cognitive frame of limited depth of reasoning.