Bayesian Model of Behaviour in Economic Games

Part of Advances in Neural Information Processing Systems 21 (NIPS 2008)

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Debajyoti Ray, Brooks King-casas, P. Montague, Peter Dayan


Classical Game Theoretic approaches that make strong rationality assumptions have difficulty modeling observed behaviour in Economic games of human subjects. We investigate the role of finite levels of iterated reasoning and non-selfish utility functions in a Partially Observable Markov Decision Process model that incorporates Game Theoretic notions of interactivity. Our generative model captures a broad class of characteristic behaviours in a multi-round Investment game. We invert the generative process for a recognition model that is used to classify 200 subjects playing an Investor-Trustee game against randomly matched opponents.