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Competing Against Experienced and Inexperienced Players

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  • Robert Slonim

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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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Bibliographic Info

Article provided by Springer in its journal Experimental Economics.

Volume (Year): 8 (2005)
Issue (Month): 1 (April)
Pages: 55-75

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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

Related research

Keywords: Game Theory; Learning; Experimental Methods;

References

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Citations

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Cited by:
  1. 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.
  2. Eugen Kovac & Martin Vojtek & Andreas Ortmann, 2008. "Comparing Guessing Games with homogeneous and heterogeneous players: Experimental results and a CH explanation," Economics Bulletin, AccessEcon, vol. 3(9), pages 1-9.
  3. 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.
  4. Le Coq, Chloé & Sturluson, Jon Thor, 2012. "Does opponents’ experience matter? Experimental evidence from a quantity precommitment game," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 265-277.
  5. Allred, Sarah & Duffy, Sean & Smith, John, 2013. "Cognitive Load and Strategic Sophistication," MPRA Paper 47997, University Library of Munich, Germany.
  6. repec:ebl:ecbull:v:3:y:2008:i:9:p:1-9 is not listed on IDEAS
  7. Gneezy, Uri & Rustichini, Aldo & Vostroknutov, Alexander, 2010. "Experience and insight in the Race game," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 144-155, August.
  8. Dufwenberg, Martin & Lindqvist, Tobias & Moore, Evan, 2003. "Bubbles and Experience: An Experiment on Speculation," Research Papers in Economics 2003:1, Stockholm University, Department of Economics.
  9. Johanna Goertz, 2012. "Market composition and experience in common-value auctions," Experimental Economics, Springer, vol. 15(1), pages 106-127, March.
  10. 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.
  11. Marina Agranov & Elizabeth Potamites & rew Schotter & Chloe Tergiman, 2012. "Beliefs and Endogenous Cognitive Levels: An Experimental Study," Mathematica Policy Research Reports 7497, Mathematica Policy Research.
  12. Martin G. Kocher & Matthias Sutter & Florian Wakolbinger, 2007. "The Impact of Na�ve Advice and Observational Learning in Beauty-contest Games," Tinbergen Institute Discussion Papers 07-015/1, Tinbergen Institute.
  13. Jonathan E. Alevy & Michael K. Price, 2012. "Advice and Fictive Learning: The Pricing of Assets in the Laboratory," Working Papers 2012-07, University of Alaska Anchorage, Department of Economics.

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