Rational Reasoning or Adaptive Behavior? Evidence from TwoPerson Beauty Contest Games  Brit Grosskopf Texas A&M University Rosemarie Nagel Universitat Pompeu Fabra June 2007 Abstract Many experiments have shown that human subjects do not nec- essarily behave in line with game theoretic assumptions and solution concepts. The reasons for this nonconformity are multiple. In this paper we study the argument whether a deviation from game theory is because subjects are rational, but doubt that others are ra- tional as well, compared to the argument that subjects, in general, are boundedly rational themselves. To distinguish these two hypotheses, we study behavior in repeated 2person and manyperson Beauty ContestGames which are strategically di/erent from one another. We analyze four di/erent treatments and observe that convergence to- ward equilibrium is driven by learning through the information about the other players choice and adaptation rather than selfinitiated ra- tional reasoning. Journal of Economic Literature Classication Numbers: C7, C9  Nagel acknowledges nancial support from the Spanish Ministry of Education and Sci- ence under grants SEC200203403 and SEJ2005-08391, the Human Frontier Science Pro- gram HFCP RGP0056/2005-C and thanks the Barcelona Economics Program of CREA for support. Contact: Brit Grosskopf, Texas A&M University, 4228 TAMU, College Station, TX 778434228, Email: bgrosskopf@econmail.tamu.edu. 1