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An experimental study of learning and limited information in games

Author

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  • Kevin A. McCabe
  • Arijit Mukherji
  • David E. Runkle

Abstract

We report on experiments that tested the predictions of competing theories of learning in games. Experimental subjects played a version of the three-person matching-pennies game. The unique mixed-strategy Nash equilibrium of this game is locally unstable under naive Bayesian learning. Sophisticated Bayesian learning predicts that expectations will converge to Nash equilibrium if players observe the entire history of play. Neither theory requires payoffs to be common knowledge. We develop maximum-likelihood tests for the independence conditions implied by the mixed-strategy Nash equilibrium. We find that perfect monitoring was sufficient and complete payoff information was unnecessary for average play to be consistent with the equilibrium (as is predicted by sophisticated Bayesian learning). When subjects had imperfect monitoring and incomplete payoff information, average play was inconsistent with the equilibrium.

Suggested Citation

  • Kevin A. McCabe & Arijit Mukherji & David E. Runkle, 1994. "An experimental study of learning and limited information in games," Staff Report 176, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmsr:176
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    Citations

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    Cited by:

    1. Pedro Rey-Biel, 2005. "Equilibrium Play and Best Reply to (Stated) Beliefs in Constant Sum Games," Experimental 0512003, EconWPA.
    2. Pedro Rey Biel, 2005. "Equilibrium PLay and Best Response to (Stated) Beliefs in Constant Sum Games," Experimental 0506003, EconWPA.
    3. Pedro Rey Biel, 2005. "Equilibrium Play and Best Response in Sequential Constant Sum Games," Experimental 0506004, EconWPA.

    More about this item

    Keywords

    Game theory;

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