Learning to make better strategic decisions

Strategic settings are often complex and agents who lack deep reasoning ability may initially fail to make optimal decisions. This paper experimentally investigates how the decision making quality of an agent's opponent impacts learning-by-doing (LBD) and learning-by-observing (LBO) in a 2-player strategic game. Specifically, does LBD become more effective when agents face an opponent who exhibits optimal decision making? Similarly, does LBO become more effective when agents observe an opponent who exhibits optimal decision making? I consider an experimental design that enables me to measure strategic decision making quality, and control the decision making quality of an agent's opponent. The results suggest that LBD is more effective when facing an optimal decision making opponent. Whereas, LBO is, at most, marginally more effective when observing an optimal decision making opponent. The results also suggest that LBD is at least as effective as LBO at improving decision making in the 2-player game considered.

[1]  M. Tomasello,et al.  Observational learning of tool-use by young chimpanzees , 1987 .

[2]  S. Huck,et al.  Learning in Cournot Oligopoly - An Experiment , 1999 .

[3]  A. Shaked,et al.  Testing non-cooperative bargaining theory: a preliminary study , 1985 .

[4]  A. Roth,et al.  Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria , 1998 .

[5]  M. J. Herbert,et al.  Observational learning by cats. , 1944 .

[6]  O. Volij,et al.  Field Centipedes , 2006 .

[7]  R. Rosenthal.  Games of perfect information, predatory pricing and the chain-store paradox , 1981 .

[8]  G. Harrison,et al.  Expectations and fairness in a simple bargaining experiment , 1996 .

[9]  R. McKelvey,et al.  An experimental study of the centipede game , 1992 .

[10]  Colin Camerer,et al.  Iterated Dominance and Iterated Best-Response in Experimental P-Beauty Contests , 1998 .

[11]  S. Siegel,et al.  Nonparametric Statistics for the Behavioral Sciences , 2022, The SAGE Encyclopedia of Research Design.

[12]  Leigh Thompson,et al.  Learning Negotiation Skills: Four Models of Knowledge Creation and Transfer , 2003, Manag. Sci..

[13]  John Duffy,et al.  On the Robustness of Behaviour in Experimental ‘Beauty Contest’ Games , 1997 .

[14]  Joerg Oechssler,et al.  Does information about competitors' actions increase or decrease competition in experimental oligopoly markets? , 1998 .

[15]  Martin Dufwenberg,et al.  Epiphany in the Game of 21 , 2010 .

[16]  Boyan Jovanovic,et al.  The Transfer of Human Capital , 1994 .

[17]  J. Carpenter.  Bargaining Outcomes as the Result of Coordinated Expectations , 2003 .

[18]  H. Sluiter.  [Learning by doing]. , 1977, Nederlands tijdschrift voor geneeskunde.

[19]  S. Fiske,et al.  The Handbook of Social Psychology , 1935 .

[20]  Karl H. Schlag,et al.  Which One Should I Imitate , 1999 .

[21]  Colin Camerer,et al.  Experienced-Weighted Attraction Learning in Normal Form Games , 2007 .

[22]  Burkhard C. Schipper,et al.  Rage against the machines: how subjects play against learning algorithms , 2010 .

[23]  Jason Shachat,et al.  Do we detect and exploit mixed strategy play by opponents? , 2004, Math. Methods Oper. Res..

[24]  K. Arrow.  The Economic Implications of Learning by Doing , 1962 .

[25]  Burkhard C. Schipper,et al.  Rage Against the Machines: How Subjects Learn to Play Against Computers , 2005 .

[26]  John Macfarlane,et al.  One - two - ? , 1992 .

[27]  M. Fishbein.  Progress in social psychology , 1980 .

[28]  G. O'Connor.  Small Groups , 1980 .

[29]  G. W. Hill.  Group versus individual performance: are n + 1 heads better than one?" psychological bulletin , 1982 .

[30]  Avinash Dixit,et al.  Restoring Fun to Game Theory , 2005 .

[31]  Antonio Merlo,et al.  Learning by Not Doing: An Experimental Investigation of Observational Learning , 2001, Games Econ. Behav..

[32]  C. Heyes,et al.  Social learning in animals : the roots of culture , 1996 .

[33]  P. Chesler.  Maternal Influence in Learning by Observation in Kittens , 1969, Science.

[34]  Rosemarie Nagel,et al.  One, Two, (Three), Infinity: Newspaper and Lab Beauty-Contest Experiments , 2000 .

[35]  Amnon Rapoport,et al.  Equilibrium Play and Adaptive Learning in a Three-Person Centipede Game , 2003, Games Econ. Behav..

[36]  P. R. Laughlin,et al.  Demonstrability and social combination processes on mathematical intellective tasks. , 1986 .

[37]  Jörg Oechssler,et al.  Imitation - Theory and Experimental Evidence , 2003, J. Econ. Theory.

[38]  R. Aumann,et al.  Unraveling in Guessing Games : An Experimental Study , 2007 .

[39]  Rosemarie Nagel,et al.  One, Two, (Three), Infinity: Newspaper and Lab Beauty-Contest Experiments , 2000 .

[40]  Charles R. Plott,et al.  The control of game form recognition in experiments: understanding dominant strategy failures in a simple two person “guessing” game , 2009 .

[41]  S. Bikhchandani,et al.  Learning from the behavior of others : conformity, fads, and informational cascades , 1998 .

[42]  Ken Binmore,et al.  A Backward Induction Experiment , 2002, J. Econ. Theory.

[43]  George Gamow.  One Two Three... , 1963 .

[44]  Patrick R. Laughlin,et al.  Social combination processes and individual learning for six-person cooperative groups on an intellective task. , 1980 .

[45]  R. McKelvey,et al.  An experimental study of constant-sum centipede games , 1996 .

[46]  Theo Offerman,et al.  Forthcoming Review of Economic Studies Imitation and Belief Learning in an Oligopoly Experiment , 2002 .

[47]  P. R. Laughlin,et al.  Groups perform better than the best individuals on letters-to-numbers problems: effects of group size. , 2006, Journal of personality and social psychology.

[48]  Joseph Terkel,et al.  Cultural Transmission of Feeding Behavior in the Black Rat (Rattus rattus) , 1996 .

[49]  V. Smith,et al.  Research in Experimental Economics , 1979 .

[50]  Nathan Rosenberg,et al.  Handbook of the Economics of Innovation , 2013 .

[51]  Eric J. Johnson,et al.  Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining , 2002, J. Econ. Theory.

[52]  B. Grofman.  Information Pooling and Group Decision Making , 1986 .

[53]  George Gamow,et al.  One, Two, Three...Infinity: Facts and Speculations of Science , 1947 .

[54]  Colin Camerer,et al.  Experience‐weighted Attraction Learning in Normal Form Games , 1999 .

[55]  Steven D. Levitt,et al.  What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World , 2007 .

[56]  Brit Grosskopf,et al.  The two-person beauty contest , 2008, Games Econ. Behav..

[57]  Aldo Rustichini,et al.  Experience and insight in the Race game , 2010 .

[58]  Fernando Vega Redondo,et al.  The evolution of walrasian behavior , 1996 .

[59]  Kelly Padden Hall,et al.  A Pure Test of Backward Induction , 2009 .