Introspection, Learning, and Equilibrium in Games: Theory and Experiment

Funding: 2015: $143,000
2016: $141,900
2017: $152,000

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.

Publications:

Goeree, JK, Louis, P & Zhang, J 2018, 'Noisy Introspection in the 11–20 Game', The Economic Journal, vol. 128, no. 611, pp. 1509-1530.
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Goeree, JK & Zhang, J 2017, 'One man, one bid', Games and Economic Behavior, vol. 101, pp. 151-171.
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Goeree, J, Holt, C & Palfrey, T 2016, Quantal Response Equilibrium – A Stochastic Theory of Games, Princeton University Press, USA.

Keywords: introspection, learning, equilibrium, experiments, market design

FOR Codes: Preference, Behaviour and Welfare, Experimental Economics, Microeconomic Theory, Microeconomic theory , Preference, behaviour and welfare