Best Responding to What? A Behavioral Approach to One Shot Play in 2x2 Games

Gallice, Andrea (January 2007): Best Responding to What? A Behavioral Approach to One Shot Play in 2x2 Games. Discussion Papers in Economics 2007-6

Abstract

We introduce a simple procedure to be used for selecting the strategies most likely to be played by inexperienced agents who interact in one shot 2x2 games. We start with an axiomatic description of a function that may capture players' beliefs. Various proposals connected with the concept of mixed strategy Nash equilibrium do not match this description. On the other hand minimax regret obeys all the axioms. Therefore we use minimax regret to approximate players' beliefs and we let players best respond to these conjectured beliefs. When compared with existing experimental evidences about one shot matching pennies games, this procedure correctly indicates the choices of the vast majority of the players. Applications to other classes of games are also explored.

• Item Type: Paper
• Keywords: prediction, beliefs, mixed strategy Nash equilibrium, minimax regret, matching pennies, experiments.
• Faculties: Economics; Economics > Munich Discussion Papers in Economics; Economics > Munich Discussion Papers in Economics > Behavioral Economics
• Subjects: 300 Social sciences > 300 Social sciences, sociology and anthropology; 300 Social sciences > 330 Economics
• JEL Classification: C72, C91
• Language: English