Taming Selten’s Horse with Impulse Response
Copyright policy )Taming Selten’s Horse with Impulse Response
The paper experimentally examines the predictive power of the trembling-hand perfect equilibrium concept in the three-player Game of Selten’s Horse. At first sight, our data show little support of the trembling-hand perfect equilibrium and rather favor the imperfect equilibrium. We introduce deterministic impulse response trajectories that converge on the trembling-hand perfect equilibrium. The impulse response trajectories are remarkably close – closer than the trajectories from a reinforcement learning model – to the observed dynamics of the game in the short run (50 periods). The quantal response approach also converges on the trembling-hand perfect equilibrium as the error rates decline, suggesting that the trembling-hand perfect equilibrium may be reached in the long run. In the long run (more than 100 periods), however, behavior seems to settle at a non-equilibrium distribution of strategies that rather supports efficient outcomes, instead of converging to the trembling-hand perfect equilibrium.
- University of Luxembourg Luxembourg
- Otto-von-Guericke University Magdeburg Germany
- University of Bonn Germany
Quantal Response, Business & economic sciences, reinforcement learning, quantal response, Trembling-hand Perfect Equilibrium, level-k, trembling-hand perfect equilibrium, \(n\)-person games, \(n>2\), Experimental studies, impulse response dynamics, Level-k, game of Selten's horse, Reinforcement Learning, Impulse Response Dynamics, Game of Selten’s Horse, learning direction theory, Learning Direction Theory, Sciences économiques & de gestion
Quantal Response, Business & economic sciences, reinforcement learning, quantal response, Trembling-hand Perfect Equilibrium, level-k, trembling-hand perfect equilibrium, \(n\)-person games, \(n>2\), Experimental studies, impulse response dynamics, Level-k, game of Selten's horse, Reinforcement Learning, Impulse Response Dynamics, Game of Selten’s Horse, learning direction theory, Learning Direction Theory, Sciences économiques & de gestion
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