First-Mover Advantage in Two-Sided Competitions: An Experimental Comparison of Role-Assignment Rules

Bradley J. Ruffle and Oscar Volij, (2012) “First-Mover Advantage in Two-Sided Competitions: An Experimental Comparison of Role-Assignment Rules." Discussion Paper No. 12-08, Monaster Center for Economic Research, Ben-Gurion University of the Negev,  Israel.

Available at SSRN: http://ssrn.com/abstract=2128225 or http://dx.doi.org/10.2139/ssrn.2128225. [PDF]

Abstract: 

Kingston (1976) and Anderson (1977) show that the probability that a given contestant wins a best-of-2k 1 series of asymmetric, zero-sum, binary-outcome games is, for a large class of assignment rules, independent of which contestant is assigned the advantageous role in each component game. We design a laboratory experiment to test this hypothesis for four simple role-assignment rules. Despite the fact that play does not uniformly conform to the equilibrium, our results show that the four assignment rules are observationally equivalent at the series level: the fraction of series won by a given contestant and all other series outcomes do not differ across the four rules.

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Equilibrium Selection in Experimental Games on Networks

Gary Charness, Francesco Feri, Miguel A. Meléndez-Jiménez, and Matthias Sutte (2012) “Equilibrium Selection in Experimental Games on Networks." working paper, Department of Economics, UC Santa Barbara. [pdf] [ideas]

 

==Abstract==

Abstract. We study behavior and equilibrium selection in experimental network games. We vary two  important  factors:  (a) actions are either  strategic  substitutes or  strategic complements, and (b)  subjects  have  either  complete  or  incomplete  information  about  the  structure  of  a  random network.  Play  conforms  strongly  to  the  theoretical  predictions,  providing  an  impressive behavioral  confirmation  of  the  Galeotti,  Goyal,  Jackson,  Vega-Redondo,  and  Yariv  (2010) model. The degree of  equilibrium play  is  striking,  even with  incomplete  information. We  find that  under  complete  information,  subjects  typically  play  the  stochastically-stable  (inefficient) equilibrium when the game involves strategic substitutes, but play the efficient one with strategic complements.   Our  results  suggest  that  equilibrium multiplicity may  not  be  a major  concern Subjects’ actions and realized outcomes under  incomplete  information depend strongly on both the degree and the connectivity. When there are multiple equilibria, subjects begin by playing the efficient equilibrium, but eventually converge to the inefficient one.

Abuse of dominance and licensing of intellectual property

Patrick Rey and David Salant(2012) “Abuse of dominance and licensing of intellectual property." International Journal of Industrial Organization,Volume 30, Issue 6, November 2012, Pages 518–527. DOI. Other PDF.

==original abstract==

We examine the impact of the licensing policies of one or more upstream owners of essential intellectual property (IP hereafter) on the variety offered by a downstream industry, as well as on consumers and social welfare. When an upstream IP monopoly increases the number of licenses, it enhances product variety, adding to consumer value, but it also intensifies downstream competition, and thus dissipates profits. As a result, the upstream IP monopoly may want to provide too many or too few licenses relative to what maximizes consumer surplus or social welfare.

With multiple IP owners, royalty stacking increases aggregate licensing fees and thus tends to limit the number of licensees, which can also reduce downstream prices for consumers. We characterize the conditions under which these reductions in downstream prices and variety are beneficial to consumers or society.