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Learning, non-equilibrium beliefs, and non-pecuniary payoffs in an experimental game

Author

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  • Miguel A. Costa-Gomes
  • Klaus G. Zauner

Abstract

We present a parametric learning model of players' dynamic and possibly out-of-equilibrium beliefs about other players' preferences that also incorporates random utility (noise). We estimate the model using the data from the four-country ultimatum game experiments of Roth et al. (1991). We find evidence that in the US and in Israel, the estimated beliefs of proposers are stationary and out-of-equilibrium, that in Slovenia, they are in equilibrium, and that in Japan, they are out-of-equilibrium, change from period to period and move away from equilibrium over time. In Japan and in the US, the estimated proposers' beliefs are further away from the uniform prior than the estimated equilibrium beliefs. The results seem to provide support for a non-pecuniary payoff explanation in all countries. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Miguel A. Costa-Gomes & Klaus G. Zauner, 2003. "Learning, non-equilibrium beliefs, and non-pecuniary payoffs in an experimental game," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 263-288, September.
    • Handle: RePEc:spr:joecth:v:22:y:2003:i:2:p:263-288
    DOI: 10.1007/s00199-002-0295-6
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    Citations

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    Cited by:

    1. Weizsacker, Georg, 2003. "Ignoring the rationality of others: evidence from experimental normal-form games," Games and Economic Behavior, Elsevier, vol. 44(1), pages 145-171, July.
    2. Miguel A. Costa-Gomes & Georg Weizsäcker, 2008. "Stated Beliefs and Play in Normal-Form Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(3), pages 729-762.
    3. Maria M. Wihardja, 2010. "Corruption In Public Procurement Auctions: Positive Equilibrium Analysis, Incentive Mechanism Design, And Empirical Study," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 35-57, March.
    4. Fehr, Ernst & Schmidt, Klaus M., 2005. "The Economics of Fairness, Reciprocity and Altruism – Experimental Evidence and New Theories," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 66, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    5. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics.
    6. Zauner, Klaus G., 2002. "The existence of equilibrium in games with randomly perturbed payoffs and applications to experimental economics," Mathematical Social Sciences, Elsevier, vol. 44(1), pages 115-120, September.

    More about this item

    Keywords

    Keywords and Phrases:Non-cooperative games; Learning models; Non-equilibrium beliefs.; JEL Classification Numbers:A13; C19; C44; C72; C92; D63; D64.;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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