Learning, information, and sorting in market entry games: theory and evidence
Previous data from experiments on market entry games, N-player games where each player faces a choice between entering a market and staying out, appear inconsistent with either mixed or pure Nash equilibria. Here we show that, in this class of game, learning theory predicts sorting, that is, in the long run, agents play a pure strategy equilibrium with some agents permanently in the market, and some permanently out. We conduct experiments with a larger number of repetitions than in previous work in order to test this prediction. We find that when subjects are given minimal information, only after close to 100 periods do subjects begin to approach equilibrium. In contrast, with full information, subjects learn to play a pure strategy equilibrium relatively quickly. However, the information which permits rapid convergence, revelation of the individual play of all opponents, is not predicted to have any effect by existing models of learning.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Ed Hopkins, 2001.
"Two Competing Models of How People Learn in Games,"
NajEcon Working Paper Reviews
- Darryl Seale & Amnon Rapoport, 2000. "Elicitation of Strategy Profiles in Large Group Coordination Games," Experimental Economics, Springer;Economic Science Association, vol. 3(2), pages 153-179, October.
- Fernando Vega Redondo, 1996.
"The evolution of walrasian behavior,"
Working Papers. Serie AD
1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Drew Fudenberg & David K. Levine, 1996.
"The Theory of Learning in Games,"
Levine's Working Paper Archive
624, David K. Levine.
- 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.
- R. McKelvey & T. Palfrey, 2010. "Quantal Response Equilibria for Normal Form Games," Levine's Working Paper Archive 510, David K. Levine.
- McKelvey, Richard D. & Palfrey, Thomas R., 1994. "Quantal Response Equilibria For Normal Form Games," Working Papers 883, California Institute of Technology, Division of the Humanities and Social Sciences.
- Benaim, Michel & Hirsch, Morris W., 1999. "Mixed Equilibria and Dynamical Systems Arising from Fictitious Play in Perturbed Games," Games and Economic Behavior, Elsevier, vol. 29(1-2), pages 36-72, October.
- Amnon Rapoport & Darryl A. Seale & Ido Erev & James A. Sundali, 1998. "Equilibrium Play in Large Group Market Entry Games," Management Science, INFORMS, vol. 44(1), pages 119-141, January.
- Hopkins, Ed & Posch, Martin, 2005.
"Attainability of boundary points under reinforcement learning,"
Games and Economic Behavior,
Elsevier, vol. 53(1), pages 110-125, October.
- Ed Hopkins & Martin Posch, 2003. "Attainability of Boundary Points under Reinforcement Learning," Levine's Working Paper Archive 506439000000000350, David K. Levine.
- Ed Hopkins & Martin Posch, 2003. "Attainability of Boundary Points under Reinforcement Learning," ESE Discussion Papers 79, Edinburgh School of Economics, University of Edinburgh.
- Monderer, Dov & Shapley, Lloyd S., 1996. "Fictitious Play Property for Games with Identical Interests," Journal of Economic Theory, Elsevier, vol. 68(1), pages 258-265, January.
- Erev, Ido & Roth, Alvin E, 1998. "Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria," American Economic Review, American Economic Association, vol. 88(4), pages 848-881, September.
- Eyal Winter & Amnon Rapoport & Darryl A. Seale, 2000. "An experimental study of coordination and learning in iterated two-market entry games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(3), pages 661-687.
- Camerer, Colin F. & Ho, Teck-Hua & Chong, Juin-Kuan, 2002. "Sophisticated Experience-Weighted Attraction Learning and Strategic Teaching in Repeated Games," Journal of Economic Theory, Elsevier, vol. 104(1), pages 137-188, May.
- Christopher M. Anderson & Colin F. Camerer, 2000. "Experience-weighted attraction learning in sender-receiver signaling games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(3), pages 689-718.
- Colin Camerer & Teck-Hua Ho, 1999. "Experience-weighted Attraction Learning in Normal Form Games," Econometrica, Econometric Society, vol. 67(4), pages 827-874, July.
- 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.
- Rapoport, Amnon & Seale, Darryl A. & Winter, Eyal, 2002. "Coordination and Learning Behavior in Large Groups with Asymmetric Players," Games and Economic Behavior, Elsevier, vol. 39(1), pages 111-136, April.
- Sarin, Rajiv & Vahid, Farshid, 1999. "Payoff Assessments without Probabilities: A Simple Dynamic Model of Choice," Games and Economic Behavior, Elsevier, vol. 28(2), pages 294-309, August.
- Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:51:y:2005:i:1:p:31-62. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.