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Colin F. Camerer presents an alternative approach to Game Theory based on cognitive hierarchy in the 2018 Economics Lecture

Colin F. Camerer presents an alternative approach to Game Theory based on cognitive hierarchy in the 2018 Economics Lecture

The director of Caltech’s T & C Chen Center for Social and Decision Neuroscience gave the lecture “Cognitive hierarchy game theory: Evidence from the lab, field and brain”, which opened the 2018-2019 academic year of the Faculty of Economics and Business

24.10.2018

Colin F. Camerer, director of the T & C Chen Center for Social and Decision Neuroscience of the California Institute of Technology (Caltech) in the United States and one of the world’s leading experts in behavioural economics gave the 2018 Economics Lecture entitled “Cognitive hierarchy game theory:  Evidence from the lab, field and brain” to open the new academic year at UPF’s Faculty of Economics and Business.

The Economics Lecture, which was given on 24 October at noon in the auditorium of the Ciutadella campus, enjoyed the presence of full professor José García Montalvo, University commissioner for scientific strategy; Walter Garcia-Fontes, dean of the Faculty of Economics and Business; Larbi Alaoui, Ramón y Cajal researcher with the Department of Economics and Business, and Pilar Miracle, treasury officer of Grupo Esteve, a partner of the Economics Lecture.

Walter Garcia-Fontes, in his initial intervention, welcomed all those present and made special mention of the students of the new bachelor’s degree in Industrial Technology and Economic Analysis, taught jointly by the UPC and UPF. The dean highlighted that the Faculty’s bachelor’s degrees are among the most coveted in the Catalan University System, and he stressed the teaching staff’s excellence and international profile as well as the rigorous and competitive systems of recruitment and promotion to which the staff is subjected.

“At the Faculty we review the course plans of the various areas, we want to give value to each of the activities that are carried out and analyse them critically in order to improve the results, techniques, methodology, theoretical classes, seminars, and so on”, the dean assured. And all with the aim of increasing the quality of our bachelor’s degrees and students’ employment prospects.

“At the Faculty we review the course plans of the various areas, we want to give value to each of the activities that are carried out and analyse them critically”

Walter Garcia-Fontes mentioned all the complementary activities that will take place in the Faculty and stressed the great work by the student associations (“we are one of the most active faculties carrying out the most activities in this field”, he affirmed). He finally encouraged all the students to work hard and to take part in both academic and extracurricular activities.

Cognitive hierarchy, the focus of the Economics Lecture

Following Larbi Alaoui’s presentation of the speaker, Colin F. Camerer began to give his lecture focusing on Game Theory, one of his fields of research. Game Theory studies individuals’ behaviour in situations of strategic interaction, in which the opponents are other individuals that have to make a decision, knowing that their rival is human.

According to Colin F. Camerer, standard Game Theory is based on the precision of the concept of equilibrium: in equilibrium, the players optimize their game taking into account what they believe the other players will do and if their beliefs are right. “This presentation deals with an alternative approach that uses a hierarchy of beliefs. The evidence of this behaviour comes from hundreds of laboratory experiments and from applications in various fields and in neuroscientifice tests on hierarchical thought encoded in brain activity”, said the speaker.

The cognitive hierarchy approach used by Colin F. Camerer breaks with the assumption of the common knowledge of rationality and is based on the idea that people use “k” levels of reasoning to model the behaviour of their rivals. It starts at level k0, where individuals do not make any effort when making a decision, and therefore, simply choose at random between the different options.

Colin F. Camerer presented several experiments and tests that have been conducted to illustrate the three areas on which the theory is based: laboratory, field and brain

During his talk, Colin F. Camerer presented several experiments and tests that have been conducted to illustrate the three areas on which the theory is based: laboratory, field and brain. One of the examples he presented was based on the ingenuity of the consumer when assessing the quality of movie reviews. Also an experiment that ties the options of k0-level players to strategic points of view, illustrated by an algorithm to predict visual importance in the choice of the locations of images.

Colin F. Camerer spoke about aspects such as the various steps in game theory modelling; cognitive hierarchy, based on examples with experimental laboratory tests (such as the “beauty contest” game), natural and field games (“Lowest unique positive integer lottery, LUPI” test), the probability of equilibrium, and memory retention experiments, that compare the response of chimpanzees and humans.

In the last part of the event, José García Montalvo thanked the Faculty and the Department of Economics and Business for promoting good academic practices; he also expressed his pride in the students, after recalling that there is a high percentage of internationalization, and finally he declared the 2018-2019 academic year open.

Album of the 2018 Economics Lecture published on Flickr

Lliçó d'inauguració d'Economia del curs 2018-2019

 

 

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93 542 21 00

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