An Experimental Study of Uncertainty in Coordination Games

Date: 2015-09-23
By: Ioannou, Christos A.
Makris, Miltiadis
Global games and Poisson games have been proposed to address equilibrium indeterminacy in Coordination games. The former assume that agents face idiosyncratic uncertainty about economic fundamentals to capture disperse information, whereas the latter model the number of actual players as a Poisson random variable to capture population uncertainty in large games. Given that their predictions differ, it is imperative to understand which type of uncertainty drives empirical behavior in macroeconomic environments with strategic complementarities. Recent experimental literature finds mixed results on whether subjects’ behavior is similar in Global and Common Knowledge Coordination games, and hence on whether idiosyncratic uncertainty about economic fundamentals is an important determinant of subjects’ behavior. Poisson Coordination games have not been investigated experimentally. We fill this gap. Our findings suggest that uncertainty about the number of actual players may influence subjects’ behavior. Crucially, such behavior is consistent with the theoretical prediction of Poisson Coordination games.

Collective choices under ambiguity

Date: 2014-08-19
By: M. Vittoria Levati (University of Verona and Max Planck Institute of Economics, Jena)
Stefan Napel (University of Bayreuth)
Ivan Soraperra (University of Verona)
We investigate experimentally whether collective choice matters for individual attitudes to ambiguity. We consider a two-urn Ellsberg experiment: one urn offers a 45% chance of winning a fixed monetary prize, the other an ambiguous chance. Participants choose either individually or in groups of three. Group decision rules vary. In one treatment the collective choice is taken by majority; in another it is dictated by two group members; in the third it is dictated by a single group member. We observe high proportions of ambiguity averse choices in both individual and collective decision making. Although a majority of participants display consistent ambiguity attitudes across their decisions, collective choice tends to foster ambiguity aversion, especially if the decision rule assigns asymmetric responsibilities to group members. Previous participation in laboratory experiments may miti- gate this.
Keywords: Ambiguity aversion, majority voting, dictatorship

Just Luck: An Experimental Study of Risk-Taking and Fairness

Cappelen, Alexander W., James Konow, Erik Ø. Sørensen, and Bertil Tungodden. 2013. “Just Luck: An Experimental Study of Risk-Taking and Fairness." American Economic Review, 103(4): 1398-1413. DOI: 10.1257/aer.103.4.1398; Online Appendix (307.82 KB) | Download Data Set (215.97 KB)


Choices involving risk significantly affect the distribution of income and wealth in society. This paper reports the results of the first experiment, to our knowledge, to study fairness views about risktaking, specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes. We find that, even though many participants focus exclusively on ex ante opportunities, most favor some redistribution ex post. Many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices. These findings apply to both stakeholders and impartial spectators.

Production economics in the presence of risk

Shankar, S. (2012). Production economics in the presence of risk*. Australian Journal of Agricultural and Resource Economics, 56(4), 597-620.  Wiley;

==original Abstract==

This paper provides an overview of the literature on production under the influence of risk. Various specifications of stochastic production function such as models with additive and multiplicative uncertainty, Just and Pope model, output-cubical, state-allocable and state-general models are discussed. Further, criteria determining optimal producer behaviour are derived for deterministic production technology and for various kinds of state-contingent technologies such as output-cubical, state-specific, state-allocable and state-general technologies. Finally, a brief discussion is presented about the drawbacks of each of these specifications of technology.


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Groups Make Better Self-Interested Decisions

Gary Charness and Matthias Sutter (2012) “Groups Make Better Self-Interested Decisions." Journal of Economic Perspectives, 26(3): 157-76. DOI: 10.1257/jep.26.3.157; URL: AEAWeb. PDF1; PDF2

==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)

==original Abstract==

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.


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  • 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.
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==cited by==

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.