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Sequential Equilibrium in Monotone Games: Theory-Based Analysis of Experimental Data

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  • Syngjoo Choi
  • Douglas Gale
  • Shachar Kariv

Abstract

A monotone game is an extensive-form game with complete information, simultaneous moves and an irreversibility structure on strategies. It captures a variety of situations in which players make partial commitments and allows us to characterize conditions under which equilibria result in socially desirable outcomes. However, since the game has many equilibrium outcomes, the theory lacks predictive power. To produce stronger predictions, one can restrict attention to the set of sequential equilibria, or Markov equilibria, or symmetric equilibria, or pure-strategy equilibria. This paper explores the relationship between equilibrium behavior in a class of monotone games, namely voluntary contribution games, and the behavior of human subjects in an experimental setting. Several key features of the symmetric Markov perfect equilibrium (SMPE) are consistent with the data. To judge how well the SMPE fits the data, we estimate a model of Quantal Response Equilibrium (QRE) [R. McKelvey, T. Palfrey, Quantal response equilibria for normal form games, Games Econ. Behav. 10 (1995) 6-38; R. McKelvey, T. Palfrey, Quantal response equilibria for extensive form games, Exp. Econ. 1 (1998) 9-41] and find that the decision rules of the QRE model are qualitatively very similar to the empirical choice probabilities.

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Bibliographic Info

Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 784828000000000278.

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Date of creation: 27 Mar 2006
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Handle: RePEc:cla:levrem:784828000000000278

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  1. Roger Lagunoff & Akihiko Matsui, . ""An 'Anti-Folk Theorem' for a Class of Asynchronously Repeated Games''," CARESS Working Papres 95-15, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  2. Leslie M. Marx & Steven A. Matthews, . "Dynamic Voluntary Contribution to a Public Project," Penn CARESS Working Papers 6f8dbf67d492ff8a10975496b, Penn Economics Department.
  3. repec:att:wimass:9712 is not listed on IDEAS
  4. Richard Mckelvey & Thomas Palfrey, 1998. "Quantal Response Equilibria for Extensive Form Games," Experimental Economics, Springer, vol. 1(1), pages 9-41, June.
  5. Gale, Douglas, 1995. "Dynamic Coordination Games," Economic Theory, Springer, vol. 5(1), pages 1-18, January.
  6. Lise Vesterlund & John Duffy & Jack Ochs, 2004. "Giving Little by Little: Dynamic Voluntary Contribution Games," Econometric Society 2004 North American Winter Meetings 402, Econometric Society.
  7. Gale, Douglas, 2001. "Monotone Games with Positive Spillovers," Games and Economic Behavior, Elsevier, vol. 37(2), pages 295-320, November.
  8. R. McKelvey & T. Palfrey, 2010. "Quantal Response Equilibria for Normal Form Games," Levine's Working Paper Archive 510, David K. Levine.
  9. Admati, Anat R & Perry, Motty, 1991. "Joint Projects without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 259-76, April.
  10. Bagnoli, Mark & Lipman, Barton L, 1992. " Private Provision of Public Goods Can Be Efficient," Public Choice, Springer, vol. 74(1), pages 59-78, July.
  11. James Andreoni, 1998. "Toward a Theory of Charitable Fund-Raising," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1186-1213, December.
  12. Aumann, Robert J. & Sorin, Sylvain, 1989. "Cooperation and bounded recall," Games and Economic Behavior, Elsevier, vol. 1(1), pages 5-39, March.
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Cited by:
  1. Garcia-Rosa, Alfonso & Kiss, Hubert Janos & Rodriguez-Lara, Ismael, 2010. "Do Social Networks Prevent Bank Runs?," UMUFAE Economics Working Papers 9723, DIGITUM. Universidad de Murcia.
  2. Steven A. Matthews, 2008. "Achievable Outcomes of Dynamic Contribution Games, Second Version," PIER Working Paper Archive 11-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 20 Jun 2011.
  3. Choi, Syngjoo & Gale, Douglas & Kariv, Shachar & Palfrey, Thomas, . "Network architecture, salience and coordination," Working Papers 1291, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Matthews, Steven A., 2013. "Achievable outcomes of dynamic contribution games," Theoretical Economics, Econometric Society, vol. 8(2), May.
  5. Sam Asher & Lorenzo Casaburi & Plamen Nikolov, 2011. "One Step at a Time: Does Gradualism Build Coordination?," Working Papers 1113, University of Namur, Department of Economics.
  6. Steven A. Matthews, 2008. "Achievable Outcomes in Smooth Dynamic Contribution Games," PIER Working Paper Archive 08-028, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. Tan, Jonathan H.W. & Breitmoser, Yves & Bolle, Friedel, 2010. "Voluntary Contributions by Consent or Dissent," MPRA Paper 22001, University Library of Munich, Germany.
  8. Benjamin Golub & Matthew O. Jackson, 2010. "Na�ve Learning in Social Networks and the Wisdom of Crowds," American Economic Journal: Microeconomics, American Economic Association, vol. 2(1), pages 112-49, February.
  9. Battaglini, Marco & Nunnari, Salvatore & Palfrey, Thomas, 2011. "Legislative bargaining and the dynamics of public investment," Discussion Papers, Research Unit: Market Behavior SP II 2011-205, Social Science Research Center Berlin (WZB).
  10. Breitmoser, Yves, 2010. "Structural modeling of altruistic giving," MPRA Paper 24262, University Library of Munich, Germany.
  11. Steven A. Matthews, 2006. "Smooth Monotone Contribution Games," PIER Working Paper Archive 06-018, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  12. Robert Kurzban & Mary Rigdon & Bart Wilson, 2008. "Incremental approaches to establishing trust," Experimental Economics, Springer, vol. 11(4), pages 370-389, December.
  13. Breitmoser, Yves, 2012. "Cooperation, but no reciprocity: Individual strategies in the repeated Prisoner's Dilemma," MPRA Paper 41731, University Library of Munich, Germany.

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