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A hidden Markov model for the detection of pure and mixed strategy play in games

id: 2048 Date: 20131014 status: published Times:
AuthorJason Shachat, J. Todd Swarthout, Lijia Wei
ContentWe 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, and allows switching between these states. 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 non-stationary dynamics. We also explore the ability of the model to forecast action choice.
JEL-CodesC92; C72; C10
KeywordsMixed Strategy; Nash Equilibrium; Experiment; Hidden Markov Model
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