An Experiment to Evaluate Bayesian Learning of Nash Equilibrium Play

UCSD Economics Discussion Paper 97-36

Posted: 28 Jun 1998

See all articles by James C. Cox

James C. Cox

Georgia State University - Department of Economics

Jason M. Shachat

National University of Singapore (NUS) - Department of Economics

Mark Walker

University of Arizona

Date Written: December 1997

Abstract

Some recent theoretical approaches to the question of how players might converge over time to a Nash equilibrium have assumed that the players update their beliefs about other players via Bayes' Rule. Jordan has shown in a Bayesian model of this kind that play will (theoretically) always converge to a complete-information Nash equilibrium, even though individual players will not generally attain complete information. We report on an experiment designed to evaluate the empirical implications of Jordan's model. A finite version of the model is constructed which generates unique predictions of subjects' choices in nearly all periods. The experimental data reveals that the theory does reasonably well at predicting the equilbria that subjects eventually play, even when there are multiple equilibria. The results thus suggest that Jordan's Bayesian model can provide an empirically effective solution to the equilibrium selection problem when the players have beliefs with finite support. However, the model's predictions about the path of play over time are not consisitent with the experimental data.

JEL Classification: C92, C72

Suggested Citation

Cox, James C. and Shachat, Jason and Walker, Mark A., An Experiment to Evaluate Bayesian Learning of Nash Equilibrium Play (December 1997). UCSD Economics Discussion Paper 97-36, Available at SSRN: https://ssrn.com/abstract=60748

James C. Cox

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-651-8888 (Phone)
404-651-0425 (Fax)

Jason Shachat (Contact Author)

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

Mark A. Walker

University of Arizona ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States
520-621-6155 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
699
PlumX Metrics