An experiment of social learning with endogenous timing
AbstractIn this paper, we experimentally investigate a social learning model with endogenous timing. Specifically, we focus on a model, in which two subjects are supposed to make a binary decision. One alternative is a safe action with a fixed payoff, while the other alternative is a risky action. The subjects can make their decisions in three stages. The safe action is reversible, but the risky action is not. A subject who delays his decision can observe the decision of the other subject in the earlier stages, and as a result, acquire more information. We show that players do delay their decisions in order to obtain more information. Furthermore, they delay especially when their private information does not particularly support the risky action. We also find evidence which suggests that risk aversion plays an important role in timing decisions, often leading to ex post inefficient outcomes. Copyright Springer-Verlag 2012
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Bibliographic InfoArticle provided by Springer in its journal Review of Economic Design.
Volume (Year): 16 (2012)
Issue (Month): 2 (September)
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Web page: http://link.springer.de/link/service/journals/10058/index.htm
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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