Paper #737
- Title:
- Finite mixture analysis of beauty-contest data using generalised beta distributions
- Authors:
- Antoni Bosch-Domènech, José Garcia Montalvo, Rosemarie Nagel and Albert Satorra
- Date:
- January 2004 (Revised: May 2010)
- Abstract:
- This paper introduces a mixture model based on the beta distribution, without preestablished means and variances, to analyze a large set of Beauty-Contest data obtained from diverse groups of experiments (Bosch-Domenech et al. 2002). This model gives a better t of the experimental data, and more precision to the hypothesis that a large proportion of individuals follow a common pattern of reasoning, described as iterated best reply (degenerate), than mixture models based on the normal distribution. The analysis shows that the means of the distributions across the groups of experiments are pretty stable, while the proportions of choices at di erent levels of reasoning vary across groups.
- Keywords:
- Keywords: Beauty-Contest experiments, decision theory, reasoning hierarchy, finite mixture distribution, beta distribution, EM algorithm.
- JEL codes:
- C24,C44,C91
- Area of Research:
- Behavioral and Experimental Economics
- Published in:
- Experimental Economics, Vol. 13(4), 461-475, 2010.
Download the paper in PDF format