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Learning to make better strategic decisions

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  • Cardella, Eric

Abstract

Strategic settings are often complex and agents who lack deep reasoning ability may initially fail to make optimal decisions. This paper experimentally investigates how the decision making quality of an agent's opponent impacts learning-by-doing (LBD) and learning-by-observing (LBO) in a 2-player strategic game. Specifically, does LBD become more effective when agents face an opponent who exhibits optimal decision making? Similarly, does LBO become more effective when agents observe an opponent who exhibits optimal decision making? I consider an experimental design that enables me to measure strategic decision making quality, and control the decision making quality of an agent's opponent. The results suggest that LBD is more effective when facing an optimal decision making opponent. Whereas, LBO is, at most, marginally more effective when observing an optimal decision making opponent. The results also suggest that LBD is at least as effective as LBO at improving decision making in the 2-player game considered.

Suggested Citation

  • Cardella, Eric, 2012. "Learning to make better strategic decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 382-392.
  • Handle: RePEc:eee:jeborg:v:84:y:2012:i:1:p:382-392
    DOI: 10.1016/j.jebo.2012.04.011
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    Cited by:

    1. Kitchens, Carl & Roomets, Alex, 2015. "Dealing with eminent domain," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 22-31.
    2. repec:eee:jeborg:v:142:y:2017:i:c:p:11-23 is not listed on IDEAS

    More about this item

    Keywords

    Learning; Learning-by-doing; Learning-by-observing; Strategic game; Dominant strategy;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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