|By:||Andrés Salamanca Lugo (TSE – Toulouse School of Economics – Toulouse School of Economics)
Olga Manrique Chaparro (Universidad Nacional de Colombia [Bogotá])
In this paper we experimentally analyze the use of private information in a class of zero-sum repeated games with incomplete information on one side and perfect monitoring. We analyze whether the information disclosure by the informed players, and its use by the uninformed players, matches the theoretical predictions. We consider two games that differ according to the amount of information that the informed player should optimally disclose: in the first game, the informed player should entirely conceal his information. In contrast, in the second game the informed player should fully disclose his information. We find that the flow of information is higher than predicted in the first game and lower than predicted in the second game. However, the use of information is strictly higher in the second game than in the first one. Uninformed subjects tend not to use the revealed information in the first game, and seem to misinterpret the revealed information in the second game.
|Keywords:||Repeated games,incomplete information,experiments|
Firm-Specific Information and Explicit Collusion in Experimental Oligopolies
By: Francisco Gomez-Martin (University of Amsterdam)
Sander Onderstal (University of Amsterdam)
Joep Sonnemans (University of Amsterdam)
We experimentally study the effect of information about competitors’ actions on cartel stability and firms’ incentives to form cartels in Cournot markets. As in previous experiments, markets become very competitive when individualized information is available and participants cannot communicate. In contrast, when communication is possible, results reverse: Markets become less competitive and cartels become more stable when individualized information is available. We also observe that the extra profits that firms obtain thanks to the possibility to communicate are higher when individualized information is present, suggesting that firms have greater incentives to form cartels in that situation.
Keywords: Cournot oligopoly; Cartels; Information; Experiments
JEL: C92 L13 L41
|By:||Jordi Brandts (Institutd’AnalisiEconomica(CSIC))
Ayça Ebru Giritligil (Murat Sertel Center for Advanced Economic Studies)
Roberto A. Weber (Department of Economics, University of Zurich)
In many areas of social life individuals receive information about a particular issue of interest from multiple sources. When these sources are connected through a network then proper aggregation of this information by an individual involves taking into account the structure of this network. The inability to aggregate properly may lead to various types of distortions. In our experiment a number of agents all want to find out the value of a particular parameter unknown to all. Agents receive private signals about the parameter and agents can communicate their estimates of the parameter repeatedly through a network, the structure of which is known by all players. We present results from experiments with four different networks. We find that the information of agents who have more outgoing links in a network gets more weight in the information aggregation of the other agents than it optimally should. Our results are consistent with the model of “persuasion bias” of De Marzo et al. (2003) and at odds with an alternative heuristic according to which the most influential agents are those with more incoming links.
|By:||Jesse Shore (Boston University – Department of Information Systems)
Ethan Bernstein (Harvard Business School, Organizational Behavior Unit)
David Lazer (Harvard University – Harvard Kennedy School (HKS))
Using data from a novel laboratory experiment on complex problem solving in which we varied the network structure of 16-person organizations, we investigate how an organization’s network structure shapes performance in problem-solving tasks. Problem solving, we argue, involves both search for information and search for solutions. Our results show that the effect of network structure is opposite for these two important and complementary forms of search. Dense clustering encourages members of a network to generate more diverse information, but discourages them from generating diverse theories: in the language of March (1991), clustering promotes exploration in information space, but decreases exploration in solution space. Previous research, generally focusing on only one of those two spaces at a time, has produced inconsistent conclusions about the value of network clustering. By adopting an experimental platform on which information was measured separately from solutions, we were able to reconcile past contradictions and clarify the effects of network clustering on problem-solving performance. The finding both provides a sharper tool for structuring organizations for knowledge work and reveals the challenges inherent in manipulating network structure to enhance performance, as the communication structure that helps one antecedent of successful problem solving may harm the other.
|Keywords:||networks, experiments, clustering, problem solving, exploration and exploitation, knowledge, information, communication, search|
|By:||Anya Savikhin Samek (School of Human Ecology, University of Wisconsin-Madison)
Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and the Economic Science Institute, Chapman University,)
Studies show that identifying contributors significantly increases contributions to public goods. In practice, however, viewing identifiable information is costly, which may discourage people from accessing such information. To address this question, we design a public goods experiment in which participants can pay a fee to view information about identities and corresponding contributions of their group members. We then compare this to a treatment in which there is no identifiable information, and a treatment in which all contributors are freely identified. Our main findings are that: (1) contributions in the treatment with costly information are as high as those in the treatment with free information, (2) participants choose to view the information about 10% of the time, and (3) being a high contributor is positively correlated with choosing to view identifiable information about others. Thus, it seems that having access to information is important even when such information is rarely viewed. Or findings have practical implications for non-profit organizations with a large pool of donors and for designers of recognition systems, especially in online communities with many participants.
|Keywords:||public-goods, information, experiments|
|JEL:||C72 C91 H41|
|By:||Silvia Martínez-Gorricho (Dpto. Análisis Económico Aplicado)|
This article considers a two-sided private information model. We assume that two exogenously given qualities are offered in a monopolistic market. Prices are fixed. A low quality seller chooses to be either honest (by charging the lower market price) or dishonest (by charging the higher price). We discuss the signaling role of the consumer’s private information on the equilibrium level of dishonesty, incidence of fraud and trade. We demonstrate that the equilibrium incidence of fraud is nonmonotonic in the buyer’s private information when the prior belief favors the low-quality seller strongly enough. This result holds as long as information is noisy and regardless of its private or public nature. Welfare consequences are ambiguous.
|Keywords:||Consumer Fraud; Asymmetric Information; Price Signalling|
|JEL:||D42 D82 G14 L15 L51|
Rules of k names are frequently used methods to appoint individuals to office. They are two-stage procedures where a first set of agents, the proposers, select k individuals from an initial set of candidates, and then another agent, the chooser, appoints one among those k in the list. In practice, the list of k names is often arrived at by letting each of the proposers screen the proposed candidates by voting for v of them and then choose those k with the highest support. We then speak of v-rules of k names. Our main purpose in this paper is to study how different choices of the parameters v and k affect the balance of power between the proposers and the choosers. From a positive point of view, we analyze a strategic game where the proposers interact to determine what list of candidates to submit. From a normative point of view, we study the performance of different rules in expected terms, under different informational assumptions. The choice of v and k is then analyzed from the perspectives of efficiency, fairness and compromise.
|Keywords:||voting rules, constitutional design, Strong Nash equilibrium, rule of k names|
Charles R. Plott and Shyam Sunder (1988) “Rational Expectations and the Aggregation of Diverse Information in Laboratory Security Markets." Econometrica, Vol. 56, No. 5 (Sep., 1988), pp. 1085-1118. Article Stable URL: http://www.jstor.org/stable/1911360; ust.hk 提供的 [PDF].
The idea that markets might aggregate and disseminate information and also resolve conflicts is central to the literature on decentralization (Hurwicz, 1972) and rational expectations (Lucas, 1972). We report on three series of experiments all of which were predicted to have performed identically by the theory of rational expectations. In two of the three series (one in which participants trade a complete set of Arrow-Debreu securities and a second in which all participants have identical preferences), double auction trading leads to efficient aggregation of diverse information and rational expectations equilibrium. Failure of the third series to exhibit such convergence demonstrates the importance of market institutions and trading instruments in achievement of equilibrium.
==Notes by yinung==
從賽局理論的角度看, 集體決策較個人決策來得理性 (rational), 因其可避免認知錯誤與限制。
不過集體決策也因此不見得會提高社會福利 (集體決策比較 self-interest)
the optimal size of the group ( A useful starting point here is Forsyth’s (2006) work)
In this paper, we describe what economists have learned about differences between group and individual decision-making. This literature is still young, and in this paper, we will mostly draw on experimental work (mainly in the laboratory) that has compared individual decision-making to group decision-making, and to individual decision-making in situations with salient group membership. The bottom line emerging from economic research on group decision-making is that groups are more likely to make choices that follow standard game-theoretic predictions, while individuals are more likely to be influenced by biases, cognitive limitations, and social considerations. In this sense, groups are generally less “behavioral" than individuals. An immediate implication of this result is that individual decisions in isolation cannot necessarily be assumed to be good predictors of the decisions made by groups. More broadly, the evidence casts doubts on traditional approaches that model economic behavior as if individuals were making decisions in isolation.
- Forsyth, Donelson R. 2006. Group Dynamics, 4th edition. Belmont, CA: Thomson Higher Education.
- Camerer, Colin F. 2003. Behavioural Game Theory: Experiments in Strategic Interaction. Princeton University Press.
- Charness, Gary, Edi Karni, and Dan Levin. 2007. “Individual and Group Decision Making under Risk: An Experimental Study of Bayesian Updating and Violations of First-Order Stochastic Dominance.” Journal of Risk and Uncertainty 35(2): 129–48.
- Charness, Gary, Edi Karni, and Dan Levin. 2010. “On the Conjunction Fallacy in Probability Judgment: New Experimental Evidence Regarding Linda.” Games and Economic Behavior 68(2): 551–56.
- Charness, Gary, and Dan Levin. 2005. “When Optimal Choices Feel Wrong: A Laboratory Study of Bayesian Updating, Complexity, and Affect.” American Economic Review 95(4): 1300–1309.
- Charness, Gary, Luca Rigotti, and Aldo Rustichini. 2007. “Individual Behavior and Group Membership.” American Economic Review 97(4): 1340–52.
- Chen, Yan, and Xin Li. 2009. “Group Identity and Social Preferences.” American Economic Review 99(1): 431–57.
- Cooper, David J., and John H. Kagel. 2005. “Are Two Heads Better Than One? Team versus Individual Play in Signaling Games.” American Economic Review 95(3): 477–509.
- Fahr, René, and Bernd Irlenbusch. 2011. “Who Follows the Crowd—Groups or Individuals?” Journal of Economic Behavior and Organization 80(2): 200–209.
- Feri, Francesco, Bernd Irlenbusch, and Matthias Sutter. 2010. “Efi ciency Gains from Team-Based Coordination—Large-Scale Experimental Evidence.” American Economic Review 100(4): 1892–1912.
- Holmstrom, Bengt. 1982. “Moral Hazard in Teams.” Bell Journal of Economics 13(2): 324–40.
- Kocher, Martin G., Sabine Strauss, and Matthias Sutter. 2006. “Individual or Team Decision-Making— Causes and Consequences of Self-Selection.” Games and Economic Behavior 56(2): 259–70.
- Kocher, Martin G., and Matthias Sutter. 2005. “The Decision Maker Matters: Individual versus Group Behavior in Experimental Beauty-Contest Games.” Economic Journal 115(500): 200–223.
- Kugler, Tamar, Gary Bornstein, Martin G. Kocher, and Matthias Sutter. 2007. “Trust between Individuals and Groups: Groups are Less Trusting Than Individuals But Just as Trustworthy.” Journal of Economic Psychology 28(6): 646–57.
- Laughlin, Patrick R., Bryan L. Bonner, and Andrew G. Miner. 2002. “Groups Perform Better Than the Best Individuals on Letter-to-Numbers Problems.” Organizational Behavior and Human Decision Processes 88(2): 606–620.
- Levitt, Steven, and John A. List. 2007. “What Do Laboratory Experiments Measuring Social Preferences Reveal about the Real World?” Journal of Economic Perspectives 21(2): 153–74.
- Mas, Alexandre, and Enrico Moretti. 2009. “Peers at Work.” American Economic Review 99(1): 112–45.
- Michaelson, Larry K., Warren E. Watson, and Robert H. Black. 1989. “A Realistic Test of Individual versus Group Consensus Decision Making.” Journal of Applied Psychology 74(5): 834–39.
- Schopler, John, Chester A. Insko, Jennifer Wieselquist, Michael Pemberton, Betty Witcher, Rob Kozar, Chris Roddenberry, and Tim Wildschut. 2001. “When Groups Are More Competitive Than Individuals: The Domain of the Discontinuity Effect.” Journal of Personality and Social Psychology 80(4): 632–44.
- Sheremeta, Roman M., and Jingjing Zhang. 2010. “Can Groups Solve the Problem of Over-bidding in Contests?” Social Choice and Welfare 35(2): 175–97.
- Song, Fei. 2008. “Trust and Reciprocity Behavior and Behavioral Forecasts: Individuals versus Group-Representatives.” Games and Economic Behavior 62(2): 675–96.
- Surowiecki, James. 2004. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. Doubleday.
- Sutter, Matthias. 2005. “Are Four Heads Better Than Two? An Experimental Beauty-Contest Game with Teams of Different Size.” Economics Letters 88(1): 41–46.
- Tversky, Amos, and Daniel Kahneman. 1983. “Extensional versus Intuitive Reasoning: The Conjunction Fallacy in Probability Judgment.” Psychological Review 90(40): 293–315.
1. Ananish Chaudhuri, Tirnud Paichayontvijit, Lifeng Shen. 2012. Gender differences in trust and trustworthiness: Individuals, single sex and mixed sex groups. Journal of Economic Psychology.