Strategic Adaptation of Humans Playing Computer Algorithms in a Repeated Constant-Sum Game

Abstract

This paper examines strategic adaptation in participants’ behavior conditional on the type of their opponent. Participants played a constant-sum game for 100 rounds against each of three pattern-detecting computer algorithms designed to exploit regularities in human behavior such as imperfections in randomizing and the use of simple heuristics. Significant evidence is presented that human participants not only change their marginal probabilities of choosing actions, but also their conditional probabilities dependent on the recent history of play. A cognitive model incorporating pattern recognition is proposed that capture the shifts in strategic behavior of the participants better than the standard non-pattern detecting model employed in the literature, the Experience Weighted Attraction model (and by extension its nested models, reinforcement learning and fictitious play belief learning).

Keywords: Learning, Pattern detection, Computer algorithms, Constant sum games, Experience weighted attraction, Repeated games

JEL Classification: C9, C63, C70, C72, C73, C91