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Perfect versus imperfect observability---An experimental test of Bagwell's result

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Author Info
Steffen Huck (Humboldt University Berlin)
Wieland Mueller (Humboldt University Berlin)

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Abstract

In a seminal paper Bagwell (1995) claims that the first mover advantage, i.e. the strategic benefit of committing oneself to an action before others can do, vanishes completely if this action is only imperfectly observed by second movers. In our paper we report on an experimental test of this prediction. We implement three versions of a game similar to an example^? given by Bagwell, each time varying the quality of the signal which informs the second mover. For experienced players we do not find empirical support for Bagwell's result. Instead, we find some support for the noisy Stackelberg equilibrium emphasised by van Damme and Hurkens (1997).

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Paper provided by EconWPA in its series Experimental with number 9804001.

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Length: 19 pages
Date of creation: 17 Apr 1998
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Handle: RePEc:wpa:wuwpex:9804001

Note: Type of Document - ps; prepared on IBM PC; pages: 19 ; figures: included
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Related research
Keywords: commitment; first-mover advantage; imperfect observability; experimental economics;

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Find related papers by JEL classification:
C9 - Mathematical and Quantitative Methods - - Design of Experiments

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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. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384.
  2. Kyle Bagwell, 1992. "Commitment and Observability in Games," Discussion Papers 1014, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  3. van Damme, Eric & Hurkens, Sjaak, 1997. "Games with Imperfectly Observable Commitment," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 282-308, October. [Downloadable!] (restricted)
  4. Guth, Werner & Kirchsteiger, Georg & Ritzberger, Klaus, 1998. "Imperfectly Observable Commitments inn-Player Games," Games and Economic Behavior, Elsevier, vol. 23(1), pages 54-74, April. [Downloadable!] (restricted)
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  5. W. Güth & S. Huck & W. Müller, . "The relevance of equal splits - On behavioral discontinuity in ultimatum games," Sonderforschungsbereich 373 1998-7, Humboldt Universitaet Berlin.
  6. Levine, David K. & Martinelli, Cesar, 1998. "Reputation with Noisy Precommitment," Journal of Economic Theory, Elsevier, vol. 78(1), pages 55-75, January. [Downloadable!] (restricted)
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  7. Amnon Rapoport, 1997. "Order of Play in Strategically Equivalent Games in Extensive Form," International Journal of Game Theory, Springer, vol. 26(1), pages 113-136.
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(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. Sven Fischer & Werner Güth & Wieland Müller & Andreas Stiehler, 2006. "From ultimatum to Nash bargaining: Theory and experimental evidence," Experimental Economics, Springer, vol. 9(1), pages 17-33, April. [Downloadable!] (restricted)
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  2. Jordi Brandts & Antonio Cabrales & Gary Charness, 2003. "Forward induction and the excess capacity puzzle: An experimental investigation," University of California at Santa Barbara, Economics Working Paper Series 15-03, Department of Economics, UC Santa Barbara. [Downloadable!]
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  3. V. Bhaskar, 2005. "Commitment and Observability in an Economic Environment," Economics Discussion Papers 596, University of Essex, Department of Economics. [Downloadable!]
  4. Johan Lagerlöf, 2000. "Policy-Motivated Candidates, Noisy Platforms, and Non-Robustness," CIG Working Papers FS IV 00-17, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
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  5. Wieland Müller & Yossi Spiegel & Werner Güth, . "Noisy leadership: An experimental approach," Papers on Strategic Interaction 2002-10, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
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  6. Felix Várdy & John Morgan, 2005. "The Value of Commitment in Contests and Tournaments when Observation is Costly," Public Economics 0504005, EconWPA. [Downloadable!]
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  7. Huck, Steffen & Mueller, Wieland & Norman, Hans-Theo, 2000. "Strategic Delegation in Experimental Markets," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  8. Robert Ritz, 2005. "Strategic incentives for market share," Economics Series Working Papers 248, University of Oxford, Department of Economics. [Downloadable!]
  9. Werner Güth & Gerlinde Fellner, 2002. "Putting Limits to Emotional Behavior - An Ultimatum Experiment Varying Threat Efficiency," Papers on Strategic Interaction 2002-04, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
  10. Poulsen, Anders, 2007. "Learning to Make Strategic Moves: Experimental Evidence," MPRA Paper 10927, University Library of Munich, Germany. [Downloadable!]
  11. Anders U. Poulsen & Michael V. M. Roos, 2009. "Do People Make Strategic Moves? Experimental Evidence on Strategic Information Avoidance," Discussion Papers 09-06, University of Copenhagen. Department of Economics. [Downloadable!]
  12. Roberto Weber & Colin Camerer & Marc Knez, 2004. "Timing and Virtual Observability in Ultimatum Bargaining and “Weak Link†Coordination Games," Experimental Economics, Springer, vol. 7(1), pages 25-48, February. [Downloadable!] (restricted)
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