Finite Mixture Analysis of Beauty-Contest Data from Multiple Samples

UPF Economics and Business Working Paper No. 737

25 Pages Posted: 12 Jul 2004

See all articles by Antoni Bosch i Domènech

Antoni Bosch i Domènech

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

José García Montalvo

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics

Albert Satorra

Universitat Pompeu Fabra

Date Written: January 2004

Abstract

This paper develops a finite mixture distribution analysis of Beauty-Contest data obtained from diverse groups of experiments. ML estimation using the EM approach provides estimates for the means and variances of the component distributions, which are common to all the groups, and estimates of the mixing proportions, which are specific to each group. This estimation is performed without imposing constraints on the parameters of the composing distributions. The statistical analysis indicates that many individuals follow a common pattern of reasoning described as iterated best reply (degenerate), and shows that the proportions of people thinking at different levels of depth vary across groups.

Keywords: Beauty-Contest experiments, reasoning hierarchy, finite mixture distribution, EM algorithm

JEL Classification: C24, C44, C91

Suggested Citation

Bosch i Domènech, Antoni and García Montalvo, José and Nagel, Rosemarie and Satorra, Albert, Finite Mixture Analysis of Beauty-Contest Data from Multiple Samples (January 2004). UPF Economics and Business Working Paper No. 737. Available at SSRN: https://ssrn.com/abstract=563322 or http://dx.doi.org/10.2139/ssrn.563322

Antoni Bosch i Domènech (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-93) 542 27 28 (Phone)
(34-93) 542 17 46 (Fax)

José García Montalvo

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Rosemarie Nagel

Universitat Pompeu Fabra - Department of Economics ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
Spain
+34 93 542 3729 (Phone)
+34 93 542 1746 (Fax)

Albert Satorra

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-93) 542 17 58 (Phone)
(34-93) 542 17 46 (Fax)

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