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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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  • Jacob K. Goeree

    ()

  • Charles A. Holt

    ()

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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Bibliographic 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

Related research

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

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References

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  1. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, Elsevier, vol. 10(1), pages 6-38, July.
  2. Arthur Schram & John Sonnemans, 2001. "Voter Turnout as a Participation Game: An Experimental Investigation," Levine's Working Paper Archive 563824000000000033, David K. Levine.
  3. Charles A. Holt & Jacob K. Goeree, 1999. "Stochastic Game Theory: For Playing Games, Not Just for Doing Theory," Virginia Economics Online Papers, University of Virginia, Department of Economics 306, University of Virginia, Department of Economics.
  4. Amnon Rapoport & Darryl A. Seale & Ido Erev & James A. Sundali, 1998. "Equilibrium Play in Large Group Market Entry Games," Management Science, INFORMS, INFORMS, vol. 44(1), pages 119-141, January.
  5. Rachel Croson & Melanie Marks, 2000. "Step Returns in Threshold Public Goods: A Meta- and Experimental Analysis," Experimental Economics, Springer, Springer, vol. 2(3), pages 239-259, March.
  6. Thomas Palfrey & Howard Rosenthal, 1983. "A strategic calculus of voting," Public Choice, Springer, Springer, vol. 41(1), pages 7-53, January.
  7. Schram, Arthur & Sonnemans, Joep, 1996. "Why people vote: Experimental evidence," Journal of Economic Psychology, Elsevier, Elsevier, vol. 17(4), pages 417-442, August.
  8. Ochs, Jack, 1990. "The Coordination Problem in Decentralized Markets: An Experiment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(2), pages 545-59, May.
  9. Palfrey, Thomas R. & Rosenthal, Howard, 1988. "Private incentives in social dilemmas : The effects of incomplete information and altruism," Journal of Public Economics, Elsevier, Elsevier, vol. 35(3), pages 309-332, April.
  10. C. Monica Capra, 1999. "Anomalous Behavior in a Traveler's Dilemma?," American Economic Review, American Economic Association, American Economic Association, vol. 89(3), pages 678-690, June.
  11. 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, Elsevier, vol. 70(2), pages 297-323, November.
  12. Offerman, Theo & Schram, Arthur & Sonnemans, Joep, 1998. "Quantal response models in step-level public good games," European Journal of Political Economy, Elsevier, Elsevier, vol. 14(1), pages 89-100, February.
  13. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, American Economic Association, vol. 89(1), pages 306-318, March.
  14. Sundali, James A. & Rapoport, Amnon & Seale, Darryl A., 1995. "Coordination in Market Entry Games with Symmetric Players," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 64(2), pages 203-218, November.
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Cited by:
  1. Sadiraj, V. & Tuinstra, J. & Winden, F. van, 2004. "Interest Group Size Dynamics and Policymaking (extensive revised version of WP 01-03)," CeNDEF Working Papers, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance 04-06, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  2. Arthur J.H.C. Schram, 2002. "Experimental Public Choice," Tinbergen Institute Discussion Papers, Tinbergen Institute 02-106/1, Tinbergen Institute.
  3. Cason, Timothy N. & Mui, Vai-Lam, 2005. "Uncertainty and resistance to reform in laboratory participation games," European Journal of Political Economy, Elsevier, Elsevier, vol. 21(3), pages 708-737, September.
  4. Vjollca Sadiraj & Jan Tuinstra & Frans Winden, 2005. "Interest group size dynamics and policymaking," Public Choice, Springer, Springer, vol. 125(3), pages 271-303, December.

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