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An Explanation of Anomalous Behavior in Binary-Choice Games: Entry, Voting, Public Goods, and the Volunteers' Dilemma

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Author Info
Jacob K. Goeree ()
Charles A. Holt ()

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Abstract

This paper characterizes behavior with "noisy" decision making for a general class of N-person, binary-choice games. Applications include: participation games, voting, market entry, binary step-level public goods games, the volunteer's dilemma, the El Farol problem, etc. A simple graphical device is used to derive comparative statics and other theoretical properties of a "quantal response" equilibrium, and the resulting predictions are compared with Nash equilibria that arise in the limiting case of no noise. Many anomalous data patterns in laboratory experiments based on these games can be explained in this manner.

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File URL: http://www.virginia.edu/economics/RePEc/vir/virpap/papers/virpap328.pdf
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Publisher Info
Paper provided by University of Virginia, Department of Economics in its series Virginia Economics Online Papers with number 328.

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Length: 33 pages
Date of creation: Jan 2000
Date of revision:
Handle: RePEc:vir:virpap:328

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Web page: http://www.virginia.edu/economics/home.html

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Related research
Keywords: participation games; entry; voting; step-level public goods games; volunteers' dilemma; quantal response equilibrium; El Farol problem; bounded rationality.;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 1998. "A theoretical analysis of altruism and decision error in public goods games," Journal of Public Economics, Elsevier, vol. 70(2), pages 297-323, November. [Downloadable!] (restricted)
  2. Rachel Croson & Melanie Marks, 2000. "Step Returns in Threshold Public Goods: A Meta- and Experimental Analysis," Experimental Economics, Springer, vol. 2(3), pages 239-259, March. [Downloadable!] (restricted)
  3. Schram, Arthur & Sonnemans, Joep, 1996. "Voter Turnout as a Participation Game: An Experimental Investigation," International Journal of Game Theory, Springer, vol. 25(3), pages 385-406.
  4. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July. [Downloadable!] (restricted)
  5. Offerman, Theo & Schram, Arthur & Sonnemans, Joep, 1998. "Quantal response models in step-level public good games," European Journal of Political Economy, Elsevier, vol. 14(1), pages 89-100, February. [Downloadable!] (restricted)
  6. Charles A. Holt & Jacob K. Goeree, 1999. "Stochastic Game Theory: For Playing Games, Not Just for Doing Theory," Virginia Economics Online Papers 306, University of Virginia, Department of Economics. [Downloadable!]
  7. Sundali, James A. & Rapoport, Amnon & Seale, Darryl A., 1995. "Coordination in Market Entry Games with Symmetric Players," Organizational Behavior and Human Decision Processes, Elsevier, vol. 64(2), pages 203-218, November. [Downloadable!] (restricted)
  8. Schram, Arthur & Sonnemans, Joep, 1996. "Why people vote: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 17(4), pages 417-442, August. [Downloadable!] (restricted)
  9. 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)
  10. Colin Camerer & Dan Lovallo, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March. [Downloadable!] (restricted)
  11. Ochs, Jack, 1990. "The Coordination Problem in Decentralized Markets: An Experiment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 545-59, May. [Downloadable!] (restricted)
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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. Palfrey, Thomas R. & Pevnitskaya, Svetlana, 2003. "Endogenous Entry and Self-selection in Private Value Auctions: An Experimental Study," Working Papers 1172, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
    Other versions:
  2. Vai-Lam Mui & Timothy N. Cason, 2004. "Uncertainty and Resistance to Reform in Laboratory Participation Games," Econometric Society 2004 Australasian Meetings 1, Econometric Society. [Downloadable!]
    Other versions:
  3. Arthur J.H.C. Schram, 2002. "Experimental Public Choice," Tinbergen Institute Discussion Papers 02-106/1, Tinbergen Institute. [Downloadable!]
  4. Jens Großer & Arthur Schram, 2004. "Neighborhood Information Exchange and Voter Participation: An Experimental Study," Working Paper Series in Economics 8, University of Cologne, Department of Economics, revised 29 Sep 2004. [Downloadable!]
  5. Sadiraj, V. & Tuinstra, J. & Winden, F. van, 2004. "Interest Group Size Dynamics and Policymaking (extensive revised version of WP 01-03)," CeNDEF Working Papers 04-06, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance. [Downloadable!]
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