Spiliopoulos, Leonidas (2008): Do repeated game players detect patterns in opponents? Revisiting the Nyarko & Schotter belief elicitation experiment.
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Abstract
The purpose of this paper is to reexamine the seminal belief elicitation experiment by Nyarko and Schotter (2002) under the prism of pattern recognition. Instead of modeling elicited beliefs by a standard weighted ﬁctitious play model this paper proposes a generalized variant of ﬁctitious play that is able to detect two period patterns in opponents’ behavior. Evidence is presented that these generalized pattern detection models provide a better ﬁt than standard weighted ﬁctitious play. Individual heterogeneity was discovered as ten players were classiﬁed as employing a two period pattern detection ﬁctitious play model, compared to eleven players who followed a nonpattern detecting ﬁctitious play model. The average estimates of the memory parameter for these classes were 0.678 and 0.456 respectively, with ﬁve individual cases where the memory parameter was equal to zero. This is in sharp contrast to the estimates obtained from standard weighted ﬁctitious play models which are centred on one, a bias introduced by the absence of a constant in these models. Nonpattern detecting ﬁctitious play models with memory parameters of zero are equivalent to the winstay/loseshift heuristic, and therefore some sub jects seem to be employing a simple heuristic alternative to more complex learning models. Simulations of these various belief formation models show that that this simple heuristic is quite eﬀective against other more complex ﬁctitious play models.
Item Type:  MPRA Paper 

Institution:  University of Sydney 
Original Title:  Do repeated game players detect patterns in opponents? Revisiting the Nyarko & Schotter belief elicitation experiment 
Language:  English 
Keywords:  learning; game theory; behavioral game theory; fictitious play; repeated games; mixed strategy; noncooperative games; pattern recognition; pattern detection; experimental economics; beliefs; belief elicitation; strategic 
Subjects:  C  Mathematical and Quantitative Methods > C9  Design of Experiments C  Mathematical and Quantitative Methods > C6  Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C63  Computational Techniques; Simulation Modeling C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C73  Stochastic and Dynamic Games; Evolutionary Games; Repeated Games C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C72  Noncooperative Games 
Item ID:  6666 
Depositing User:  Leonidas Spiliopoulos 
Date Deposited:  09. Jan 2008 01:39 
Last Modified:  11. Feb 2013 09:57 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/6666 
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