Individual Differences in EWA Learning with Partial Payoff Information

TeckH. Ho, Xin Wang and ColinF. Camerer

Economic Journal, 2008, vol. 118, issue 525, 37-59

Abstract: We extend experience-weighted attraction (EWA) learning to games in which only the set of possible foregone payoffs from unchosen strategies are known, and estimate parameters "separately" for each player to study heterogeneity. We assume players estimate unknown foregone payoffs from a strategy, by substituting the last payoff actually received from that strategy, by clairvoyantly guessing the actual foregone payoff, or by averaging the set of possible foregone payoffs conditional on the actual outcomes. All three assumptions improve predictive accuracy of EWA. Individual parameter estimates suggest that players cluster into two separate subgroups (which differ from traditional reinforcement and belief learning). Copyright 2008 The Author(s). Journal compilation Royal Economic Society 2008.

Date: 2008
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