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Can the human mind learn to backward induce? A neural network answer

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  • Leonidas Spiliopoulos

    (University of Sydney)

Abstract

This paper addresses the question of whether neural networks, a realistic cognitive model of the human information processing, can learn to backward induce in a two stage game with a unique subgame-perfect Nash Equilibrium. The result that the neural networks only learn a heuristic that approximates the desired output and does not backward induce is in accordance with the documented difficulty of humans to apply backward induction and their dependence on heuristics.

Suggested Citation

  • Leonidas Spiliopoulos, 2005. "Can the human mind learn to backward induce? A neural network answer," Game Theory and Information 0505008, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:0505008
    Note: Type of Document - pdf; pages: 9
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/game/papers/0505/0505008.pdf
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    References listed on IDEAS

    as
    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, December.
    2. Binmore, Ken & McCarthy, John & Ponti, Giovanni & Samuelson, Larry & Shaked, Avner, 2002. "A Backward Induction Experiment," Journal of Economic Theory, Elsevier, vol. 104(1), pages 48-88, May.
    3. Nakamura, Emi, 2005. "Inflation forecasting using a neural network," Economics Letters, Elsevier, vol. 86(3), pages 373-378, March.
    4. Johnson, Eric J. & Camerer, Colin & Sen, Sankar & Rymon, Talia, 2002. "Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining," Journal of Economic Theory, Elsevier, vol. 104(1), pages 16-47, May.
    5. D. Sgroi & D. J. Zizzo, 2002. "Strategy Learning in 3x3 Games by Neural Networks," Cambridge Working Papers in Economics 0207, Faculty of Economics, University of Cambridge.
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    Keywords

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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