This is an accepted paper by RES (online version posted on January 7, 2014).
Perfect strategic thinking is a key assumption in standard game theory, but it’s often unattainable in real games or experiments. The strategic thinking limits can be explained by imperfect choice or imperfect attention. The authors use “Mousetracking” (recording which payoff the subjects attend to and for how long) to investigate the strategic thinking limits in private information games. The games have three information states and vary in strategic complexity. Subjects consistently deviate from Nash equilibrium choices and often fail to look at payoffs which they need to in order to compute an equilibrium response. Cluster analysis according to lookup patterns and choices shows that three clusters appear to correspond approximately to level-3, level-2 and level-1 thinking in level-k models, and a fourth cluster is consistent with inferential mistakes . Deviations from Nash play are associated with failure to look at the necessary payoffs. The time durations of looking at key payoffs can predict choices, to some extent, at the individual level and at the trial-by-trial level.