Individual Characteristics and Behavior in Repeated Games: An Experimental Study

Date: 2014-10
By: Douglas Davis (Virginia Commonwealth University)
Asen Ivanov (Queen Mary University of London)
Oleg Korenok (Virginia Commonwealth University)
Using a laboratory experiment, we investigate whether a variety of behaviors in repeated games are related to an array of individual characteristics that are popular in economics: risk attitude, time preference, trust, trustworthiness, altruism, strategic skills in one-shot matrix games, compliance with first-order stochastic dominance, ability to plan ahead, and gender. We do find some systematic relationships. A subject’s patience, gender, altruism, and compliance with first-order stochastic dominance have some limited systematic effects on her behavior in repeated games. At the level of a pair of subjects who are playing a repeated game, each subject’s patience, gender, and ability to choose an available dominant strategy in a one-shot matrix game systematically affect the frequency of the cooperate-cooperate outcome. However, overall, the number of systematic relationships is surprisingly small.
Keywords: Experiment, Repeated game, Individual characteristics
JEL: C91 C92 D03 D70

Information Acquisition and Decisions under Risk and Ambiguity

Date: 2014-05
By: Ralf Bergheim
This paper experimentally investigates individual information acquisition and decisions in ambiguous situations in which the degree of ambiguity can endogenously and individually be decreased by the subjects. In particular, I analyze how risk aversion, ambiguity attitude and personality traits are related to an individual’s information acquisition prior to a decision and to the decision itself based on this information. I focus on urn decisions and conduct treatments that consider the loss and gain domain separately and that vary the amount of available information and the probabilistic structure.
Keywords: Ambiguity aversion; risk aversion; experiment; decision making; information acquisition; personality traits
JEL: C91 D03 D81

Experimental games on networks: Underpinnings of behavior and equilibrium selection

Date: 2014-04
By: Gary Charness
Francesco Feri
Miguel A. Meléndez-Jiménez
Matthias Sutter
In this paper, we describe a series of laboratory experiments that implement specific examples of a more general network structure and we examine equilibrium selection. Specifically, actions are either strategic substitutes or strategic complements, and participants have either complete or incomplete information about the structure of a random network. Since economic environments typically have a considerable degree of complementarity or substitutability, this framework applies to a wide variety of settings. The degree of equilibrium play is striking, in particular with incomplete information. Behavior closely resembles the theoretical equilibrium whenever this is unique; when there are multiple equilibria, general features of networks, such as connectivity, clustering, and the degree of the players, help to predict informed behavior in the lab. People appear to be strongly attracted to maximizing aggregate payoffs (social efficiency), but there are forces that moderate this attraction: 1) people seem content with (in the aggregate) capturing only the lion’s share of the efficient profits in exchange for reduced exposure to loss, and 2) uncertainty about the network structure makes it considerably more difficult to coordinate on a demanding, but efficient, equilibrium that is typically implemented with complete information.
Keywords: Random networks, Incomplete information, Connectivity, Clustering, Strategic substitutes, Strategic complements, Experiment
JEL: C71 C91 D03 D85

An experimental study of sorting in group contests

YNY: 這是一篇比較 group 之組成成員能力不同下, 所形成 overbidding 的實驗文獻。

Date: 2014-01
By: Philip Brookins (Department of Economics, Florida State University)
John Lightle (Department of Economics, Florida State University)
Dmitry Ryvkin (Department of Economics, Florida State University)
We study experimentally the effects of sorting in contests between groups of heterogeneous players whose within-group efforts are perfect substitutes. The theory predicts that higher aggregate effort will be reached when variation in ability between groups is lower, i.e., by a more balanced sorting. In the experiment, we assign subjects to four types — A, B, C, and D — ranked by their cost of effort, with A having the lowest and D having the highest cost, and conduct contests between two groups of two players each. In the Balanced treatment, (A,D) groups (i.e., groups comprised of a type A and a type D player) compete with (B,C) groups, whereas in the Unbalanced treatment, (A,B) groups compete with (C,D) groups. We find substantial heterogeneity and overinvestment of efforts by all types in both treatments, including the “underdog" (C,D) group which surprisingly is not demoralized by the unbalanced matching. Despite strong overbidding, relative aggregate efforts are remarkably close to equilibrium predictions both between treatments and between groups within each treatment. The results confirm the prediction that balanced sorting leads to higher aggregate effort.
Keywords: contest, group, sorting, heterogeneous players, experiment
JEL: C72 C91 M54 D72