Tree Construction and Backward Induction: A Mobile Experiment

71 Pages Posted: 31 May 2018 Last revised: 12 Jun 2018

See all articles by Konrad Grabiszewski

Konrad Grabiszewski

University of Miami - School of Business Administration

Alex R. Horenstein

University of Miami - School of Business Administration - Department of Economics

Date Written: May 19, 2018

Abstract

Game theory is a collection of tools to analyze interactive situations. We focus on two fundamental tools employed in the context of dynamic games: tree construction (modeling reality in its simplified form) and backward induction (solving the tree in terms of strategy profiles). We ask whether these tools work; that is, whether people behave as if they were constructing trees and backward inducting. We find that sometimes these tools work and proceed to explain when and why they fail. We find two key forces: subject’s skills and complexity of interaction. We show how to measure skills and complexity. We also analyze the relationship between the structure of interaction and its complexity. Finally, we compare the relative importance of skills and complexity in terms of increasing the likelihood of subjects constructing a tree and backward inducting. In order to collect the data, we conduct a mobile experiment: we developed the mobile game Blues and Reds that is available for free for both iOS and Android devices.

Keywords: game theory; mobile experiment; tree construction; backward induction

Suggested Citation

Grabiszewski, Konrad and Horenstein, Alex R., Tree Construction and Backward Induction: A Mobile Experiment (May 19, 2018). Available at SSRN: https://ssrn.com/abstract=3181740 or http://dx.doi.org/10.2139/ssrn.3181740

Konrad Grabiszewski

University of Miami - School of Business Administration ( email )

Department of Economics
P.O. Box 248126
Coral Gables, FL 33124
United States

Alex R. Horenstein (Contact Author)

University of Miami - School of Business Administration - Department of Economics ( email )

P.O. Box 248126
Coral Gables, FL 33124-6550
United States

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