Cognitive abilities and behavior in strategic-form games.*

This paper investigates the relation between cognitive abilities and behavior in strategic-form games with the help of a novel experiment. The design allows us first to measure the cognitive abilities of subjects without confound and then to evaluate their impact on behaviour in strategic-from games. We find that subjects with better cognitive abilities show more sophisticated behavior and make better use of information on cognitive abilities and preferences of opponents. Although we do not find evidence for Nash behavior, observed behaviour is remarkably sophisticated, as almost 80% of subjects behave near optimal and outperform Nash behavior with respect to expected pay-offs.cognitive ability; behaviours; strategic-form games; experiments; preferences; sophistication

Periodic Strategies: A New Solution Concept and an Algorithm for NonTrivial Strategic Form Games

We introduce a new solution concept, called periodicity, for selecting optimal strategies in strategic form games. This periodicity solution concept yields new insight into non-trivial games. In mixed strategy strategic form games, periodic solutions yield values for the utility function of each player that are equal to the Nash equilibrium ones. In contrast to the Nash strategies, here the payoffs of each player are robust against what the opponent plays. Sometimes, periodicity strategies yield higher utilities, and sometimes the Nash strategies do, but often the utilities of these two strategies coincide. We formally define and study periodic strategies in two player perfect information strategic form games with pure strategies and we prove that every non-trivial finite game has at least one periodic strategy, with non-trivial meaning non-degenerate payoffs. In some classes of games where mixed strategies are used, we identify quantitative features. Particularly interesting are the implications for collective action games, since there the collective action strategy can be incorporated in a purely non-cooperative context. Moreover, we address the periodicity issue when the players have a continuum set of strategies available.Comment: Revised version, similar to the one published in Advances in Complex System

Defecting or not defecting: how to "read" human behavior during cooperative games by EEG measurements

Understanding the neural mechanisms responsible for human social interactions is difficult, since the brain activities of two or more individuals have to be examined simultaneously and correlated with the observed social patterns. We introduce the concept of hyper-brain network, a connectivity pattern representing at once the information flow among the cortical regions of a single brain as well as the relations among the areas of two distinct brains. Graph analysis of hyper-brain networks constructed from the EEG scanning of 26 couples of individuals playing the Iterated Prisoner's Dilemma reveals the possibility to predict non-cooperative interactions during the decision-making phase. The hyper-brain networks of two-defector couples have significantly less inter-brain links and overall higher modularity - i.e. the tendency to form two separate subgraphs - than couples playing cooperative or tit-for-tat strategies. The decision to defect can be "read" in advance by evaluating the changes of connectivity pattern in the hyper-brain network

Equilibrium selection through incomplete information in coordination games: An experimental study

We perform an experiment on a pure coordination game with uncertainty about the payoffs. Our game is closely related to models that have been used in many macroeconomic and financial applications to solve problems of equilibrium indeterminacy. In our experiment each subject receives a noisy signal about the true payoffs. This game has a unique strategy profile that survives the iterative deletion of strictly dominated strategies (thus a unique Nash equilibrium). The equilibrium outcome coincides, on average, with the risk-dominant equilibrium outcome of the underlying coordination game. The behavior of the subjects converges to the theoretical prediction after enough experience has been gained. The data (and the comments) suggest that subjects do not apply through "a priori" reasoning the iterated deletion of dominated strategies. Instead, they adapt to the responses of other players. Thus, the length of the learning phase clearly varies for the different signals. We also test behavior in a game without uncertainty as a benchmark case. The game with uncertainty is inspired by the "global" games of Carlsson and Van Damme (1993).Global games, risk dominance, equilibrium selection, common knowledge, Leex

Stated Beliefs and Play in Normal-Form Games

Using data on one-shot games, we investigate the assumption that players respond to underlying expectations about their opponent's behavior. In our laboratory experiments, subjects play a set of 14 two-person 3x3 games, and state first order beliefs about their opponent'sbehavior. The sets of responses in the two tasks are largely inconsistent. Rather, we findevidence that the subjects perceive the games differently when they (i) choose actions, and (ii) state beliefs _ they appear to pay more attention to the opponent's incentives when they state beliefs than when they play the games. On average, they fail to best respond to their own stated beliefs in almost half of the games. The inconsistency is confirmed by estimates of a unified statistical model that jointly uses the actions and the belief statements. There, we can control for noise, and formulate a statistical test that rejects consistency. Effects of the belief elicitation procedure on subsequent actions are mostly insignificant.

Stated belief and play in normal form games

Using data on one-shot games, we investigate the assumption that players respond to underlying expectations about their opponent�s behavior. In our laboratory experiments, subjects play a set of 14 two-person 3x3 games, and state first order beliefs about their opponent�s behavior. The sets of responses in the two tasks are largely inconsistent. Rather, we find evidence that the subjects perceive the games differently when they (i) choose actions, and (ii) state beliefs � they appear to pay more attention to the opponent�s incentives when they state beliefs than when they play the games. On average, they fail to best respond to their own stated beliefs in almost half of the games. The inconsistency is confirmed by estimates of a unified statistical model that jointly uses the actions and the belief statements. There, we can control for noise, and formulate a statistical test that rejects consistency. Effects of the belief elicitation procedure on subsequent actions are mostly insignificant