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A finite mixture analysis of beauty-contest data using generalized beta distributions

Author

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  • Antoni Bosch-Domènech
  • José Montalvo
  • Rosemarie Nagel
  • Albert Satorra

Abstract

This paper introduces a mixture model based on the beta distribution, without preestablished means and variances, to analyze a large set of Beauty-Contest data obtained from diverse groups of experiments (Bosch-Dom`enech et al. 2002). This model gives a better fit of the experimental data, and more precision to the hypothesis that a large proportion of individuals follow a common pattern of reasoning, described as iterated best reply (degenerate), than mixture models based on the normal distribution. The analysis shows that the means of the distributions across the groups of experiments are pretty stable, while the proportions of choices at different levels of reasoning vary across groups.
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Suggested Citation

  • Antoni Bosch-Domènech & José Montalvo & Rosemarie Nagel & Albert Satorra, 2010. "A finite mixture analysis of beauty-contest data using generalized beta distributions," Experimental Economics, Springer;Economic Science Association, vol. 13(4), pages 461-475, December.
  • Handle: RePEc:kap:expeco:v:13:y:2010:i:4:p:461-475
    DOI: 10.1007/s10683-010-9251-7
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    2. Francesco Fallucchi & Andrea Mercatanti & Jan Niederreiter, 2021. "Identifying types in contest experiments," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(1), pages 39-61, March.
    3. Chen, Xiaohong & Ponomareva, Maria & Tamer, Elie, 2014. "Likelihood inference in some finite mixture models," Journal of Econometrics, Elsevier, vol. 182(1), pages 87-99.
    4. Nagel, Rosemarie & Bühren, Christoph & Frank, Björn, 2017. "Inspired and inspiring: Hervé Moulin and the discovery of the beauty contest game," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 191-207.
    5. Engel, Christoph, 2020. "Estimating heterogeneous reactions to experimental treatments," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 124-147.
    6. Mariano Runco, 2013. "Estimating depth of reasoning in a repeated guessing game with no feedback," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 402-413, September.
    7. Chen, Xiao & Feng, Zhenghui & Peng, Heng, 2023. "Estimation and order selection for multivariate exponential power mixture models," Journal of Multivariate Analysis, Elsevier, vol. 195(C).
    8. Peter G Moffatt & Ganna Pogrebna & Graciela Zevallos-Porles, 2020. "Depth of Reasoning Models with Sophisticated Agents," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 20-06, School of Economics, University of East Anglia, Norwich, UK..
    9. Timo Ehrig & Jaison Manjaly & Aditya Singh & Shyam Sunder, 2022. "Adaptive Rationality in Strategic Interaction: Do Emotions Regulate Thinking About Others?," Strategy Science, INFORMS, vol. 7(4), pages 330-349, December.
    10. King King Li & Kang Rong, 2023. "A Two-Step Guessing Game," Post-Print hal-04376266, HAL.
    11. Burchardi, Konrad B. & Penczynski, Stefan P., 2014. "Out of your mind: Eliciting individual reasoning in one shot games," Games and Economic Behavior, Elsevier, vol. 84(C), pages 39-57.
    12. Mariano Runco, 2015. "Bounded Rationality in a Cournot Duopoly Game," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 79-94, November.
    13. Johannes Leder & Leonhard Schilbach & Andreas Mojzisch, 2016. "Strategic Decision-Making and Social Skills: Integrating Behavioral Economics and Social Cognition Research," IJFS, MDPI, vol. 4(4), pages 1-14, November.
    14. Wengström, Erik, 2007. "Setting the Anchor: Price Competition, Level-n Theory and Communication," Working Papers 2007:6, Lund University, Department of Economics.
    15. Leder, Johannes & Häusser, Jan Alexander & Mojzisch, Andreas, 2015. "Exploring the underpinnings of impaired strategic decision-making under stress," Journal of Economic Psychology, Elsevier, vol. 49(C), pages 133-140.
    16. Müller, Julia & Schwieren, Christiane, 2011. "More than Meets the Eye: an Eye-tracking Experiment on the Beauty Contest Game," Working Papers 0516, University of Heidelberg, Department of Economics.

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    More about this item

    Keywords

    Beauty-contest experiments; Decision theory; Reasoning hierarchy; Finite mixture distribution; Beta distribution; EM algorithm; C14; C16; C72; C91; D03;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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