A Bayesian Hierarchical Model for Inferring Player Strategy Types in a Number Guessing Game

Abstract

The p-beauty contest is a multi-player number guessing game that is widely used to study strategic behavior. Using new data from a specially-designed web experiment, we examine the evidence in favor of a popular class of behavioral economic models called k-step thinking models. After fitting a custom Bayesian spline model to the experimental data, we estimate that the proportion of players who could be using a k-step thinking strategy is approximately 25%.

Keywords: behavioral game theory, hierarchical modeling, partial identification