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Signaling Without Common Prior: An Experiment

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  • Michalis Drouvelis
  • Wieland Muller
  • Alex Possajennikov

Abstract

The common prior assumption is pervasive in game-theoretic models with incomplete information. This paper investigates experimentally the importance of inducing a common prior in a two-person signaling game. For a specific probability distribution of the sender's type, the long-run behavior without an induced common prior is shown to be different from the behavior when a common prior is induced, while for other distributions behavior is similar under both regimes. We also present a learning model that allows players to learn about the other players' strategies and the prior distribution of the sender's type. We show that this learning model accurately accounts for all main features of the data.

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Bibliographic Info

Paper provided by Department of Economics, University of York in its series Discussion Papers with number 09/08.

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Date of creation: Apr 2009
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Handle: RePEc:yor:yorken:09/08

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  1. Brandts, Jordi & Holt, Charles A, 1992. "An Experimental Test of Equilibrium Dominance in Signaling Games," American Economic Review, American Economic Association, vol. 82(5), pages 1350-65, December.
  2. Werner Güth & Radosveta Ivanova-Stenzel, . "Asymmetric Auction Experiments With(out) Commonly Known Beliefs," Papers on Strategic Interaction 2002-36, Max Planck Institute of Economics, Strategic Interaction Group.
  3. Brandts, Jordi & Holt, Charles A, 1993. "Adjustment Patterns and Equilibrium Selection in Experimental Signaling Games," International Journal of Game Theory, Springer, vol. 22(3), pages 279-302.
  4. Oechssler, Jorg & Schipper, Burkhard, 2003. "Can you guess the game you are playing?," Games and Economic Behavior, Elsevier, vol. 43(1), pages 137-152, April.
  5. Banks, Jeffrey & Camerer, Colin & Porter, David., 1990. "An Experimental Analysis of Nash Refinements in Signaling Games," Working Papers 740, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. Eddie Dekel & Drew Fudenberg & David K. Levine, 2000. "Learning to Play Bayesian Games," Discussion Papers 1322, Northwestern University, Center for Mathematical Studies in Economics and Management Science, revised Jul 2001.
  7. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  8. Miguel Costa-Gomes & Vincent P. Crawford & Bruno Broseta, . "Cognition and Behavior in Normal-Form Games:An Experimental Study," Discussion Papers 00/45, Department of Economics, University of York.
  9. David J. Cooper & Susan Garvin & John H. Kagel, 1997. "Signalling and Adaptive Learning in an Entry Limit Pricing Game," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 662-683, Winter.
  10. Christopher M. Anderson & Colin F. Camerer, 2000. "Experience-weighted attraction learning in sender-receiver signaling games," Economic Theory, Springer, vol. 16(3), pages 689-718.
  11. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
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Cited by:
  1. Brandts, Jordi & Yao, Lan, 2010. "Ambiguous Information and Market Entry: An Experimental Study," MPRA Paper 25276, University Library of Munich, Germany.

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