Research Articles

Economic Theory

, Volume 15, Issue 2, pp 421-462

An experimental study of information and mixed-strategy play in the three-person matching-pennies game

  • Kevin A. McCabeAffiliated withEconomic Science Laboratory and Department of Economics, College of Business and Public Administration, University of Arizona, Tucson, AZ 85721, USA
  • , Arijit MukherjiAffiliated withUniversity of Minnesota, Minneapolis, MN 55455, USA (e-mail: arijit@tc.umn.edu)
  • , David E. RunkleAffiliated withUniversity of Minnesota, Minneapolis, MN 55455, USA (e-mail: arijit@tc.umn.edu)

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Summary.

Recent experiments on mixed-strategy play in experimental games reject the hypothesis that subjects play a mixed strategy even when that strategy is the unique Nash equilibrium prediction. However, in a three-person matching-pennies game played with perfect monitoring and complete payoff information, we cannot reject the hypothesis that subjects play the mixed-strategy Nash equilibrium. Given this support for mixed-strategy play, we then consider two qualitatively different learning theories (sophisticated Bayesian and naive Bayesian) which predict that the amount of information given to subjects will determine whether they can learn to play the predicted mixed strategies. We reject the hypothesis that subjects play the symmetric mixed-strategy Nash equilibrium when they do not have complete payoff information. This finding suggests that players did not use sophisticated Bayesian learning to reach the mixed-strategy Nash equilibrium.

Keywords and Phrases:Nash equilibrium, Bayesian learning, Experimental.
JEL Classification Numbers:C72, C91, D83.