How do people play games? More formally, how do people make decisions in strategic situations? This is a question that has concerned game theorists for decades. Do they use the analytic techniques employed by game theorists or do they use other approaches? Evidence from experiments conducted over the past 20 years has shown that in many situations people do not engage in the sort of analysis that a game theorist would. In the last five years, there have been a number of studies aimed at trying to determine if the decision making behavior used by experimental subjects can be described by a few simple learning heuristics and algorithms. The current study first identifies a recurring problem in the methods used to identify player types in these studies and then proposes an alternative experimental design to eliminate this problem. This research is the basis for my dissertation and the funding from the grant will be used in performing the experimental portion of the work. The basic problem with previous studies is that the econometric and statistical methods they use are not capable of discriminating between learning rules. The two basic classes of learning rules differ according to the type of information players are thought to base their decisions on: their own payoff history or past plays by their opponent. Rules that are contained in the same class differ on the particular amount of and manner in which this information is used. Previous studies observed only strategy choices in the experiments and then attempted to use econometric tests to determine simultaneously which type of information the subjects used and how they used it. A simulations based study has shown that these econometric tests fail to be able to succeed in both tasks. Based on the reasons these methods fail, the proposed study includes an extra component in the experiment intended to monitor the use of information by subjects. This is intended to allow the experimenter to determine which type of information the subjects are using in order to aid in the process of modeling their learning or decision making behavior. The result should be a more accurate and reliable means of identifying the use of learning rules among the subjects and possibly even identifying behavior not described by current models.
