Playing the game the others want to play : Keynes’ beauty contest revisited

Date: 2015
By: Camille Cornand (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
Rodolphe Dos Santos Ferreira (BETA-Strasbourg University, 61 avenue de la Forêt Noire – 67085 Strasbourg Cedex, France; Catolica Lisbon School of Business and Economics)
URL: http://d.repec.org/n?u=RePEc:gat:wpaper:1501&r=net
In Keynes’ beauty contest, agents have to choose actions in accordance with an expected fundamental value and with the conventional value expected to be set by the market. In doing so, agents respond to a fundamental and to a coordination motive respectively, the prevalence of either motive being set exogenously. Our contribution is to consider whether agents favor the fundamental or the coordination motive as the result of a strategic choice that generates a strong strategic complementarity of agents’ actions. We show that the coordination motive tends to prevail over the fundamental one, which yields a disconnection of activity away from the fundamental. A valuation game and a competition game are provided as illustrations of this general framework.
Keywords: beauty contest, financial markets, indeterminacy, oligopolistic competition,strategic complementarities
JEL: D43 D84 E12 E44 L13
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Communication and Coordination in a Two-Stage Game

Date: 2015
By: Tjaša Bjedov (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France; University of Fribourg, Bd de Pérolles 90 CH-1700 Fribourg, Switzerland)
Thierry Madiès (University of Fribourg, Bd de Pérolles 90 CH-1700 Fribourg, Switzerland)
Marie Claire Villeval (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France)
URL: http://d.repec.org/n?u=RePEc:gat:wpaper:1507&r=net
We study the impact of communication on behavior in a two-stage coordination game with asymmetric payoffs. We test experimentally whether individuals can avoid a head-to-head confrontation by means of coordinated strategies. In particular we analyze whether and how quickly a conflict-avoidance take-turn strategy can emerge. First, our results show that players learn to solve the conflict by choosing opposite options at both stages of the game. Second, many adopt a take-turn strategy to sustain coordination over time and alleviate the inequality induced by the asymmetry of payoffs. Third, communication increases the likelihood of conflict resolution even when a single pair member has the right to communicate.
Keywords: Coordination, communication, turn taking, conflict, experiment
JEL: C91 D74 L15 H71

Authority and Centrality: Power and Cooperation in Social Dilemma Networks

Date: 2015-03
By: Ramalingam, Abhijit
Rojo Arjona, David
Schram, Arthur
Van Leeuwen, Boris
URL: http://d.repec.org/n?u=RePEc:tse:iastwp:29140&r=net
We investigate the effects of power on cooperation in repeated social dilemma settings. Groups of five players play either multi-player trust games or VCM-games on a fixed network. Power stems from having the authority to allocate funds raised through voluntary contributions by all members and/or from having a pivotal position in the network (centrality). We compare environments with and without ostracism by allowing players in some treatments to exclude others from further participation in the network. Our results show that power matters but that its effects hinge strongly on the type involved. Reminiscent of the literature on leadership, players with authority often act more cooperatively than those without such power. Nevertheless, when possible, they are quickly ostracized from the group. Thus, this kind of power is not tolerated by the powerless. In stark contrast, centrality leads to less cooperative behavior and this free riding is not punished; conditional on cooperativeness, players with power from centrality are less likely to be ostracized than those without. Hence, not only is this type of power tolerated, but so is the free riding it leads to.
Keywords: power, cooperation, networks, public goods
JEL: C91 D02 D03 H41

Whom are you talking with ? An experiment on credibility and communication structure

Date: 2014-11-05
By: GRANDJEAN, Gilles (CEREC, Université Saint-Louis – Bruxelles)
MANTOVANI, Marco (CEREC, Université Saint-Louis – Bruxelles; DEMS, University of Milan – Bicocca)
MAULEON, Ana (CEREC, Université Saint-Louis – Bruxelles; Universit√© catholique de Louvain, CORE, Belgium)
VANNETELBOSCH, Vincent (CEREC, Université Saint-Louis – Bruxelles; Université catholique de Louvain, CORE, Belgium)
URL: http://d.repec.org/n?u=RePEc:cor:louvco:2014042&r=net
The paper analyzes the role of the structure of communication Рi.e. who is talking with whom Рon the choice of messages, on their credibility and on actual play. We run an experiment in a three-player coordination game with Pareto ranked equilibria, where a pair of agents has a profitable joint deviation from the Pareto-dominant equilibrium. According to our analysis of credibility, the subjects should communicate and play the Pareto optimal equilibrium only when communication is public. When pair of agents exchange messages privately, the players should play the Pareto dominated equilibrium and disregard communication. The experimental data conform to our predictions: the agents reach the Pareto-dominant equilibrium only when announcing to play it is credible. When private communication is allowed, lying is prevalent, and players converge to the Pareto-dominated equilibrium. Nevertheless, at the individual level, players’ beliefs and choices tend to react to messages even when these are non-credible.

Communication and Coordination in a Two-Stage Game

Date: 2015-03
By: Bjedov, Tjaša (University of Fribourg)
Madies, Thierry (University of Fribourg)
Villeval, Marie Claire (CNRS, GATE)
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp8953&r=net
We study the impact of communication on behavior in a two-stage coordination game with asymmetric payoffs. We test experimentally whether individuals can avoid a head-to-head confrontation by means of coordinated strategies. In particular we analyze whether and how quickly a conflict-avoidance take-turn strategy can emerge. First, our results show that players learn to solve the conflict by choosing opposite options at both stages of the game. Second, many adopt a take-turn strategy to sustain coordination over time and alleviate the inequality induced by the asymmetry of payoffs. Third, communication increases the likelihood of conflict resolution even when a single pair member has the right to communicate.
Keywords: coordination, communication, turn taking, conflict, experiment
JEL: C91 D74 L15 H71

Can Farmers Create Efficient Information Networks? Experimental Evidence from Rural India

Date: 2015
By: A. Stefano Caria
Marcel Fafchamps
URL: http://d.repec.org/n?u=RePEc:csa:wpaper:2015-07&r=net
We run an artefactual field experiment in rural India which tests whether farmers can create efficient networks in a repeated link formation game, and whether group categorization results in homophily and loss of network efficiency. We find that the efficiency of the networks formed in the experiment is significantly lower than the efficiency which could be achieved under selfish, rational play. Many individual decisions are consistent with selfish rationality and with a concern for overall welfare, but the tendency to link with the ‘most popular’ farmer in the network causes large efficiency losses. When information about group membership is disclosed, social networks become more homophilous, but not significantly less efficient. Networks play an important role in the diffusion of innovations in developing countries. If they are inefficiently structured, there is scope for development policies that support diffusion.

Are Results of Social- and Self-Image Concerns in Voluntary Contributions Game Similar?

==notes by yinung==

self-image concerns: 可看見別人的決策, 但別人看不到自己的決策
social-image concerns: 自己的決策可以被看見

自我傾向者, 隨團隊走 (若貢獻<平均, 則增加貢獻), 而且此種人, 貢獻較穩定

Date: 2015-02
By: Martin Daniel Siyaranamual (Department of Economics, Padjadjaran University)
URL: http://d.repec.org/n?u=RePEc:unp:wpaper:201501&r=net
Social interactions may encourage the cooperative behaviours by triggering either self-image concerns (when one sees others’ decisions without being seen) or social-image concerns (when one’s decision is seen by others). A laboratory experiment is designed to compare these two concerns directly, using a four-players finitely repeated public goods experiment on two directed star networks, self-image and social-image networks. The comparison of the players voluntary contributions in both types of networks reveals that their contributing behaviours are statistically indistinguishable. However, the players who belong to the self-image network are more willing to conform with the group behaviours, meaning that they will increase (reduce) the contributions if theirs are below (above) their groups average. Furthermore, I also find evidence that the contributing behaviours are more stable in the self-image networks than in the social-image network.
Keywords: Social-image; Self-image; Directed network; Public good experiment
JEL: C92 D19 H41 Z13

Ultimatum game: A meta-analysis of the past three decades of experimental research

Date: 2014-10
By: Jean-Christian Tisserand (CRESE)
URL: http://d.repec.org/n?u=RePEc:sek:iacpro:0802032&r=net
The ultimatum game undoubtely lists the largest experimental literature of the past three decades. In this article, we focus on the choice of the proposer of the ultimatum game and the explanatory variables that may influence the amount offered. We perform a meta-analysis with a total of 97 observations from simple ultimatum game gathered through 42 articles published between 1983 and 2012. While the theoretical prediction announces that the equilibrium offer should be zero, our results show that the weighted average offer is 42.3% of the amount at stake. Among the numerous variables studied, only being an economist has a significant impact on the amounts offered.
Keywords: Meta-analysis, Ultimatum game, Experimental economics, Microeconomics, Behavioral economics
JEL: C78 C91 D03

An experimental online matching pennies game

Date: 2015
By: Aurora García-Gallego (University Jaume I, LEE & Department of Economics)
Penelope Hernández-Rojas (University of Valencia, ERI-CES & Department of Economics Analysis)
Amalia Rodrigo-González (University of Valencia, Department of Corporate Finance)
URL: http://d.repec.org/n?u=RePEc:jau:wpaper:2015/03&r=net
The theoretical communication model by Gossner et al. (2006) (GHN henceforth) based on the matching pennies game has recently been implemented by García-Gallego et al. (2013) (GHR henceforth) in the lab, emphasizing the transmission of information among players with aligned incentives. The present work contributes to characterize the optimal structure of the equilibrium strategies or the set up under consideration. Also, we establish the length of the sequence of the experimental game for which the players’ optimal strategy is the majority rule, considering a minimal length of 3. Finally, we aim at testing the model by GHN (2006). Experimental findings give! support to the theoretical results in GHN (2006).
Keywords: experiments, coordination, cheap-talk, efficiency
JEL: D8 C91 C73

Price competition and reputation in markets for experience goods: An experimental study

Date: 2015
By: Huck, Steffen
Lünser, Gabriele K.
Tyran, Jean-Robert
URL: http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2013312r&r=net
We experimentally examine the effects of price competition in markets for expe-rience goods where sellers can build up reputations for quality. We compare price competition to monopolistic markets and markets where prices are exogenously fixed (somewhere between the endogenous oligopoly and monopoly prices). While oligopolies benefit consumers regardless of whether prices are fixed or endoge-nously chosen, we find that price competition lowers efficiency as consumers pay too little attention to reputation for quality. This provides empirical support to recent models in behavioral industrial organization that assume that consumers may with increasing complexity of the market place focus on selected dimensions of products. We also find that consumers’ attention to quality and, hence, provided quality drops when regulated prices are set at levels that are too low.
Keywords: Markets,Price competition,Behavioral IO,Price regulation,Reputation,Trust,Moral hazard,Experience goods
JEL: C72 C90 D40 D80 L10