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Competing Against Experienced and Inexperienced Players

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Author Info
Robert Slonim ()
Abstract

In certain markets success may depend on how well participants anticipate the behavior of other participants who have varying amounts of experience. Understanding if and how people’s behavior depends on competitors’ level of experience is important since in most markets participants have varying amounts of experience. Examining data from two new experimental studies similar to the beauty contest game first studied by Nagel (1995), the results indicate that (1) players with no experience behave the same against competitors with and without experience but (2) players quickly learn to condition their behavior on competitors’ experience level, causing (3) behavior to stop moving toward the equilibrium whenever new players enter the game and (4) experienced players to earn more money than less experienced players. The paper discusses the implications of the results for understanding and modeling behavior in markets in which participants have different amounts of experience. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s10683-005-0437-3
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Publisher Info
Article provided by Springer in its journal Experimental Economics.

Volume (Year): 8 (2005)
Issue (Month): 1 (April)
Pages: 55-75
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:expeco:v:8:y:2005:i:1:p:55-75

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Web page: http://www.springerlink.com/link.asp?id=102888

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Related research
Keywords: Game Theory; Learning; Experimental Methods;

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Dufwenberg, Martin & Lindqvist, Tobias & Moore, Evan, 2003. "Bubbles and Experience: An Experiment on Speculation," Working Paper Series 588, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  2. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March. [Downloadable!] (restricted)
  3. Camerer, Colin, . "Progress and Behavioral Game Theory," Working Papers 1004, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  4. Schotter, A. & Sopher, B., 2001. "Social Learning and Coordination Conventions in Inter-Generational Games: An Experimental Study," Working Papers 01-10, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
    Other versions:
  5. Camerer, Colin F. & Ho, Teck H. & Chong, Juin-Kuan., 2000. "Sophisticated EWA Learning and Strategic Teaching in Repeated Games," Working Papers 1087, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  6. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December. [Downloadable!] (restricted)
  7. John H. Kagel & Dan Levin, 1999. "Common Value Auctions with Insider Information," Econometrica, Econometric Society, vol. 67(5), pages 1219-1238, September.
  8. Dyer, Douglas & Kagel, John H & Levin, Dan, 1989. "A Comparison of Naive and Experienced Bidders in Common Value Offer Auctions: A Laboratory Analysis," Economic Journal, Royal Economic Society, vol. 99(394), pages 108-15, March. [Downloadable!] (restricted)
    Other versions:
  9. Stahl, Dale O., 2000. "Rule Learning in Symmetric Normal-Form Games: Theory and Evidence," Games and Economic Behavior, Elsevier, vol. 32(1), pages 105-138, July. [Downloadable!] (restricted)
  10. Ockenfels, Axel & Roth, Alvin E., 2006. "Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction," Games and Economic Behavior, Elsevier, vol. 55(2), pages 297-320, May. [Downloadable!] (restricted)
    Other versions:
  11. Erev, Ido & Roth, Alvin E, 1998. "Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria," American Economic Review, American Economic Association, vol. 88(4), pages 848-81, September. [Downloadable!] (restricted)
  12. Kagel, John H & Levin, Dan, 1991. "The Winner's Curse and Public Information in Common Value Auctions: Reply," American Economic Review, American Economic Association, vol. 81(1), pages 362-69, March. [Downloadable!] (restricted)
    Other versions:
  13. Weber, Roberto A., 2003. "'Learning' with no feedback in a competitive guessing game," Games and Economic Behavior, Elsevier, vol. 44(1), pages 134-144, July. [Downloadable!] (restricted)
  14. Nagel, Rosemarie, 1995. "Unraveling in Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 85(5), pages 1313-26, December. [Downloadable!] (restricted)
  15. Johnson, Eric J. & Camerer, Colin & Sen, Sankar & Rymon, Talia, 1998. "Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining," Working Papers 1040, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  16. Duffy, John & Nagel, Rosemarie, 1997. "On the Robustness of Behaviour in Experimental "Beauty Contest" Games," Economic Journal, Royal Economic Society, vol. 107(445), pages 1684-1700, November. [Downloadable!] (restricted)
  17. Andreoni, James A & Miller, John H, 1993. "Rational Cooperation in the Finitely Repeated Prisoner's Dilemma: Experimental Evidence," Economic Journal, Royal Economic Society, vol. 103(418), pages 570-85, May. [Downloadable!] (restricted)
  18. Brit Grosskopf & Rosemarie Nagel, 2007. "Rational Reasoning or Adaptive Behavior? Evidence from Two-Person Beauty Contest Games," Economics Working Papers 1068, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  19. David Cooper & John H. Kagel, 2003. "Lessons Learned: Generalizing Learning Across Games," American Economic Review, American Economic Association, vol. 93(2), pages 202-207, May. [Downloadable!]
  20. Camerer, Colin F, 1997. "Progress in Behavioral Game Theory," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 167-88, Fall. [Downloadable!] (restricted)
  21. Johnson, Eric J. & Camerer, Colin & Sen, Sankar & Rymon, Talia, 2002. "Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining," Journal of Economic Theory, Elsevier, vol. 104(1), pages 16-47, May. [Downloadable!] (restricted)
  22. Croson, Rachel T. A., 1996. "Partners and strangers revisited," Economics Letters, Elsevier, vol. 53(1), pages 25-32, October. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Martin Dufwenberg & Tobias Lindqvist & Evan Moore, 2005. "Bubbles and Experience: An Experiment," American Economic Review, American Economic Association, vol. 95(5), pages 1731-1737, December. [Downloadable!]
  2. Joep Sonnemans & Jan Tuinstra, 2008. "Positive Expectations Feedback Experiments and Number Guessing Games as Models of Financial Markets," Tinbergen Institute Discussion Papers 08-076/1, Tinbergen Institute. [Downloadable!]
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