Pattern Recognition and Subjective Belief Learning in a Repeated Constant-Sum Game

26 Pages Posted: 16 Mar 2007 Last revised: 13 Aug 2012

See all articles by Leonidas Spiliopoulos

Leonidas Spiliopoulos

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Human Development

Date Written: January 31, 2010

Abstract

This paper aspires to fill a conspicuous gap in the literature regarding learning in games — the absence of empirical verification of learning rules involving pattern recognition. Weighted fictitious play is extended to detect two-period patterns in opponents’ behavior and to comply with the cognitive laws of subjective perception. An analysis of the data from Nyarko and Schotter (2002) uncovers significant evidence of pattern recognition in elicited beliefs and action choices. The probability that subjects employ pattern recognition depends positively on a measure of the exploitable two-period patterns in an opponent’s action choices, in stark contrast to the minimax hypothesis. A significant proportion of the subjects’ competence in pattern recognition is the result of a subconscious/automatic cognitive mechanism, implying that elicited beliefs may not adequately represent the complete learning process of game players. Additionally, standard weighted fictitious play models are found to bias memory parameter estimates upwards due to mis-specification.

Keywords: Behavioral game theory, Learning, Fictitious play beliefs, Pattern detection, Repeated constant-sum games

JEL Classification: C91, C70, C72, C73

Suggested Citation

Spiliopoulos, Leonidas, Pattern Recognition and Subjective Belief Learning in a Repeated Constant-Sum Game (January 31, 2010). Games and Economic Behavior, Vol. 75, No. 2, 2012, Available at SSRN: https://ssrn.com/abstract=970416 or http://dx.doi.org/10.2139/ssrn.970416

Leonidas Spiliopoulos (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Human Development ( email )

Lentzeallee 94
D-14195 Berlin, 14195
Germany

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