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The Investment Game With Asymmetric Information

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  • Giorgio Coricelli
  • Luis González Morales
  • Amelie Mahlstedt

Abstract

We analyze the effects of introducing asymmetric information and expectations in the investment game ( Berg et al., Games and Economic Behavior, 1995 , 10, 122-42). In our experiment, only the trustee knows the size of the surplus. Subjects' expectations about each other's behavior are also elicited. Our results show that average payback levels increase with the average amount sent. Asymmetric information does not reduce the amounts sent and returned, as compared with previous experimental studies. The first movers' choices increase with their expectations about the second movers' payback, whose choices depend in turn on the difference between expected and actual amounts received. Copyright Blackwell Publishing Ltd 2006.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Metroeconomica.

Volume (Year): 57 (2006)
Issue (Month): 1 (02)
Pages: 13-30

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Handle: RePEc:bla:metroe:v:57:y:2006:i:1:p:13-30

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  1. Ernst Fehr & Simon G�chter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
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Cited by:
  1. Sokolovskyi, Dmytro & Sokolovska, Olena, 2013. "The problem of arising the Pareto inefficient norm in relations “investor – government” type," MPRA Paper 44745, University Library of Munich, Germany.
  2. Di Bartolomeo Giovanni & Papa Stefano & Bellomo Saverio, 2012. "Yoga beyond wellness: Meditation, trust and cooperation," wp.comunite 0095, Department of Communication, University of Teramo.
  3. Kanagaretnam, Kiridaran & Mestelman, Stuart & Nainar, S.M. Khalid & Shehata, Mohamed, 2010. "Trust and reciprocity with transparency and repeated interactions," Journal of Business Research, Elsevier, vol. 63(3), pages 241-247, March.
  4. Bonein, Aurélie & Serra, Daniel, 2009. "Gender pairing bias in trustworthiness," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 779-789, October.
  5. Kiridaran Kanagaretnam & Stuart Mestelman & S. M. Khalid Nainar & Mohamed Shehata, 2012. "Trust and Reciprocity, Empowerment and Transparency," Department of Economics Working Papers 2012-12, McMaster University.
  6. Di Bartolomeo Giovanni & Papa Stefano, 2012. "The triadic design to identify trust and reciprocity: Extensions and robustness," wp.comunite 0096, Department of Communication, University of Teramo.
  7. Kiridaran Kanagaretnam & Stuart Mestelman & S. M. Khalid Nainar & Mohamed Shehata, 2013. "Transparency, Empowerment, Disempowerment and Trust in an Investment Environment," Department of Economics Working Papers 2013-09, McMaster University, revised Oct 2013.
  8. Vladimír Gazda & Marek Gróf & Július Horváth & Matúš Kubák & Tomáš Rosival, 2012. "Agent based model of a simple economy," Journal of Economic Interaction and Coordination, Springer, vol. 7(2), pages 209-221, October.

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