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The Investment Game With Asymmetric Information

  • Giorgio Coricelli
  • Luis González Morales
  • Amelie Mahlstedt

We analyze the effects of introducing asymmetric information and expectations in the investment game ( Berg et al., Games and Economic Behavior, 1995 , 10, 122-42). In our experiment, only the trustee knows the size of the surplus. Subjects' expectations about each other's behavior are also elicited. Our results show that average payback levels increase with the average amount sent. Asymmetric information does not reduce the amounts sent and returned, as compared with previous experimental studies. The first movers' choices increase with their expectations about the second movers' payback, whose choices depend in turn on the difference between expected and actual amounts received. Copyright Blackwell Publishing Ltd 2006.

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Article provided by Wiley Blackwell in its journal Metroeconomica.

Volume (Year): 57 (2006)
Issue (Month): 1 (02)
Pages: 13-30

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Handle: RePEc:bla:metroe:v:57:y:2006:i:1:p:13-30
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  6. Guth, Werner & Huck, Steffen & Ockenfels, Peter, 1996. "Two-Level Ultimatum Bargaining with Incomplete Information: An Experimental Study," Economic Journal, Royal Economic Society, vol. 106(436), pages 593-604, May.
  7. Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers 040, Institute for Empirical Research in Economics - University of Zurich.
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