Heuristics in experiments with infinitely large strategy spaces

Jørgen Vitting Andersen () and Philippe de Peretti ()
Additional contact information
Jørgen Vitting Andersen: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Philippe de Peretti: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We introduce a new methodology that enables detection of the onset of convergence towards Nash equilibria in simple repeated games with infinitely large strategy spaces, thereby revealing the heuristics used in decision-making. The method works by constraining on a special finite subset of strategies, called decoupled strategies. We show how the technique can be applied to understand price formation in financial market experiments by introducing a predictive measure ΔD: tthe different between positive decoupled strategies (recommending to buy) and negative decoupled strategies (recommending to sell). Using ΔD we illustrate how the method can predict (at certain special times) participants' actions with a high success rate in a series of experiments.

Keywords: Complexity theory; Decoupling; Infinite strategy space; Multi-period games; Bounded rationality; Agent-based modeling (search for similar items in EconPapers)
Date: 2020
Note: View the original document on HAL open archive server: https://hal.science/hal-02435934
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Journal of Business Research, 2020, 129, pp.612-620. ⟨10.1016/j.jbusres.2019.12.034⟩

Downloads: (external link)
https://hal.science/hal-02435934/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-02435934

DOI: 10.1016/j.jbusres.2019.12.034

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().