A Hidden Markov Model for the Detection of Pure and Mixed Strategy Play in Games

Shachat, J.; Swarthout, J.; Wei, L.

Abstract

We propose a statistical model to assess whether individuals strategically use mixed strategies in repeated games. We formulate a hidden Markov model in which the latent state space contains both pure and mixed strategies. We apply the model to data from an experiment in which human subjects repeatedly play a normal form game against a computer that always follows its part of the unique mixed strategy Nash equilibrium profile. Estimated results show significant mixed strategy play and nonstationary dynamics. We also explore the ability of the model to forecast action choice.

Citation

Shachat, J., Swarthout, J., & Wei, L. (2015). A Hidden Markov Model for the Detection of Pure and Mixed Strategy Play in Games. Econometric Theory, 31(04), 729-752. https://doi.org/10.1017/s026646661400053x

• Journal Article Type: Article
• Online Publication Date: Oct 24, 2014
• Publication Date: Aug 1, 2015
• Deposit Date: Sep 17, 2014
• Publicly Available Date: Apr 7, 2015
• Journal: Econometric Theory
• Print ISSN: 0266-4666
• Electronic ISSN: 1469-4360
• Publisher: Cambridge University Press
• Peer Reviewed: Peer Reviewed
• Volume: 31
• Issue: 04
• Pages: 729-752
• DOI: https://doi.org/10.1017/s026646661400053x
• Public URL: https://durham-repository.worktribe.com/output/1420795