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Experiments with the Traveler's Dilemma: Welfare, Strategic Choice and Implicit Collusion

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Author Info
Kaushik Basuy
Leonardo Becchetti
Luca Stanca ()

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Abstract

This paper investigates behavior in the Traveler's Dilemma game and isolates deviations from textbook predictions caused by di®erences in welfare perceptions and strategic miscalculations. It presents the results of an experimental analysis based on a 2x2 design where the own and the other subject's bonus-penalty parameters are changed independently. We ¯nd that the change in own bonus-penalty alone entirely explains the e®ect on claims of a simultaneous change in one's own and the other's bonus-penalty. An increase in the other subject's bonus-penalty has a signi¯cant negative e®ect on claims when the own bonus-penalty is low, whereas it does not have a signi¯cant e®ect when the own bonus-penalty is high. We also ¯nd that expected claims are inconsistent with actual claims in the asymmetric treatments. Focus- ing on reported strategies, we document substantial heterogeneity and show that changes in choices across treatments are to a large extent explained by risk aversion.

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File URL: http://dipeco.economia.unimib.it/repec/pdf/mibwpaper147.pdf
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Publisher Info
Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 147.

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Length: 37 pages
Date of creation: Oct 2008
Date of revision: Oct 2008
Handle: RePEc:mib:wpaper:147

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  1. Ariel Rubinstein, 2006. "Dilemmas of an Economic Theorist," Econometrica, Econometric Society, vol. 74(4), pages 865-883, 07. [Downloadable!] (restricted)
  2. Tilman Becker & Michael Carter & Jörg Naeve, 2005. "Experts Playing the Traveler's Dilemma," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 252/2005, Department of Economics, University of Hohenheim, Germany. [Downloadable!]
  3. C. Monica Capra et al., 1999. "Anomalous Behavior in a Traveler's Dilemma?," American Economic Review, American Economic Association, vol. 89(3), pages 678-690, June. [Downloadable!] (restricted)
  4. Susana Cabrera & C. Capra & Rosario Gómez, 2007. "Behavior in one-shot traveler’s dilemma games: model and experiments with advice," Spanish Economic Review, Springer, vol. 9(2), pages 129-152, June. [Downloadable!] (restricted)
  5. Susana Cabrera & C. Mónica Capra & Rosario Gómez, 2005. "Introspection in one-shot traveler’s dilemma games," Emory Economics 0504, Department of Economics, Emory University (Atlanta). [Downloadable!]
  6. C. Monica Capra & Susana Cabrera & Rosario Gómez, 2003. "The Effects of Common Advice on One-shot Traveler’s Dilemma Games: Explaining Behavior through an Introspective Model with Errors," Economic Working Papers at Centro de Estudios Andaluces E2003/17, Centro de Estudios Andaluces. [Downloadable!]
  7. Basu, Kaushik, 1994. "The Traveler's Dilemma: Paradoxes of Rationality in Game Theory," American Economic Review, American Economic Association, vol. 84(2), pages 391-95, May. [Downloadable!] (restricted)
  8. Jacob K. Goeree & Charles A. Holt, 2000. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," Virginia Economics Online Papers 333, University of Virginia, Department of Economics. [Downloadable!]
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  9. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June. [Downloadable!] (restricted)
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