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Who acts more like a game theorist? Group and individual play in a sequential market game and the effect of the time horizon

  • Müller, Wieland
  • Tan, Fangfang

Previous experimental results on one-shot sequential two-player games show that group decisions are closer to the subgame-perfect Nash equilibrium than individual decisions. We extend the analysis of intergroup versus interindividual decision-making by running both one-shot and repeated sessions of a simple two-player sequential market game (Stackelberg duopoly). Whereas in one-shot markets we find no significant differences in the behavior of groups and individuals, in repeated markets we find that the behavior of groups is further away from the subgame-perfect equilibrium of the stage game than that of individuals. To a large extent, this result is independent of the method of eliciting choices (sequential or strategy method), the matching protocol (random- or fixed-matching), and the econometric method used to account for observed first- and second-mover behavior. We discuss various possible explanations for the differential effect that the time horizon of interaction has on the extent of individual and group playersʼ (non)conformity with subgame perfectness.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 82 (2013)
Issue (Month): C ()
Pages: 658-674

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Handle: RePEc:eee:gamebe:v:82:y:2013:i:c:p:658-674
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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