Introspection, Learning, and Equilibrium in Games: Theory and Experiment
Funding: 2015: $143,000
Funding or Partner Organisation: Australian Research Council (ARC Discovery Projects)
Start year: 2015
Summary: Game theory is being increasingly used in the social sciences, but the extreme reliance on perfect decision making and perfect foresight has raised doubts about its empirical relevance. This skepticism is reinforced by laboratory evidence showing behavior patterns that are systematically biased away from game-theoretic predictions. This project concerns the development and testing of models more descriptive of actual human behavior. One aim is to deliver hybrid models able to reproduce interesting patterns of first-period play (introspection), time-series data in repeated games (learning), and systematic departures from static equilibrium. Another aim is to apply a successful hybrid to improve the design of economic and social institutions.
Goeree, J, Holt, C & Palfrey, T 2016, Quantal Response Equilibrium – A Stochastic Theory of Games, Princeton University Press, USA.
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Keywords: introspection, learning, equilibrium, experiments, market design
FOR Codes: Preference, Behaviour and Welfare, Experimental Economics, Microeconomic Theory