An Experimental Study of Behavior and Cognition from the Perspective of Inductive Game Theory

We conduct an experimental study on behavior and cognition in prisoner’s dilemmas with and without role-switching from the perspective of inductive game theory (IGT). It is basic for our study that subjects have no prior knowledge about any payoffs, even their own; they may learn them by repeated play. Without role-switching, many subjects learned relevant payoffs successfully and played a dominant strategy consistently with predictions of IGT. With role-switching, IGT makes two behavioral predictions: one is a Nash equilibrium, and the other is maximization of the sum of payoffs. These two alternatives were observed for many matched pairs of subjects. We study subjects’ understandings of payoffs by analyzing their answers to a questionnaire given after the experiment, and look into the relations to behaviors; we find that behavior is often determined by the learned payoffs. We present a model of individual behavior based on the basic postulates of IGT, which allows us to conduct various statistical hypothesis tests for the behavior data. One test shows some statistical (history-) independence of subjects’ behavior. Our study not only supports but also sharpens the basic postulates of IGT. JEL Classification Numbers: C72, C79, C91