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Positional learning with noise

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  • Ponti, Giovanni
  • Carbone, Enrica

Abstract

We propose (and test experimentally) a model of observational learning in which players have social preferences. To this end, we design an experiment-based on a classic parlor game known as the Chinos Game-in which we vary (by way of an exogenous iid stochastic process) the probability of getting the prize in the event of a correct guess. By this design, we are able to estimate more efficiently players' sensitivity to difference in payoffs (and how this sensitivity affects information decoding along the sequence). We also condition our estimates upon additional information on subjects' socio-demographics, risk attitudes and cognitive reflection by way of a questionnaire that we collect at the end of each session.

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Bibliographic Info

Article provided by Elsevier in its journal Research in Economics.

Volume (Year): 63 (2009)
Issue (Month): 4 (December)
Pages: 225-241

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Handle: RePEc:eee:reecon:v:63:y:2009:i:4:p:225-241

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Web page: http://www.elsevier.com/locate/inca/622941

Related research

Keywords: Positional learning Quantal response equilibria;

References

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  1. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  2. Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
  3. Dan Ariely & Uri Gneezy & George Loewenstein & Nina Mazar, 2005. "Large stakes and big mistakes," Working Papers, Federal Reserve Bank of Boston 05-11, Federal Reserve Bank of Boston.
  4. R. McKelvey & T. Palfrey, 2010. "Quantal Response Equilibria for Normal Form Games," Levine's Working Paper Archive 510, David K. Levine.
  5. Barry Sopher & Inigo Zapater, 1998. "Communication and Coordination in Signalling Games: An Experimental Study," Departmental Working Papers, Rutgers University, Department of Economics 199803, Rutgers University, Department of Economics.
  6. Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
  7. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
  8. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  9. Bogaçhan Çelen & Shachar Kariv, 2004. "Distinguishing Informational Cascades from Herd Behavior in the Laboratory," American Economic Review, American Economic Association, vol. 94(3), pages 484-498, June.
  10. Glenn Harrison & E. Rutström, 2009. "Expected utility theory and prospect theory: one wedding and a decent funeral," Experimental Economics, Springer, vol. 12(2), pages 133-158, June.
  11. Francesco Feri & Miguel A. Mel?ndez-Jim?nez & Giovanni Ponti & Fernando Vega Redondo, 2008. "Error Cascades in Observational Learning: An Experiment on the Chinos Game," Working Papers 2008-21, Faculty of Economics and Statistics, University of Innsbruck.
  12. Allsopp, L. & Hey, J.D., 1998. "Two Experiments to Test a Model of Herd Behaviour," Discussion Papers, Department of Economics, University of Birmingham 98-28, Department of Economics, University of Birmingham.
  13. Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-62, December.
  14. Celen, Bogachan & Kariv, Shachar, 2004. "Observational learning under imperfect information," Games and Economic Behavior, Elsevier, vol. 47(1), pages 72-86, April.
  15. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 797-817, August.
  16. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
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Cited by:
  1. Filippin, A. & Crosetto, P., 2014. "A reconsideration of gender differences in risk attitudes," Working Papers, Grenoble Applied Economics Laboratory (GAEL) 2014-01, Grenoble Applied Economics Laboratory (GAEL).
  2. Francesco Feri & Miguel A. Mel?ndez-Jim?nez & Giovanni Ponti & Fernando Vega Redondo, 2008. "Error Cascades in Observational Learning: An Experiment on the Chinos Game," Working Papers 2008-21, Faculty of Economics and Statistics, University of Innsbruck.
  3. Paolo Crosetto & Antonio Filippin & Janna Heider, 2013. "A Study of Outcome Reporting Bias Using Gender Differences in Risk Attitudes," CESifo Working Paper Series 4466, CESifo Group Munich.

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