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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

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  • Wieland Mueller
  • Fangfang Tan

Abstract

Previous experimental results on one-shot sequential two-player games show that group decisions are closer to the subgame-perfect Nash equilbirum than individual decisions. We extend the analysis of inter-group versus inter-individual decision making to a Stackelberg market game, by running both one-shot and repeated markets. Whereas in the one-shot markets we find no significant differences in the behavior of groups and individuals, 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) and the method used to account for observed first- and second-mover behavior. We provide evidence on followers' response functions and electronic chats to offer an explanation for the differential effect that the time horizon of interaction has on the extent of individual and group players (non)conformity with subgame perfectness.

Suggested Citation

  • Wieland Mueller & Fangfang Tan, 2011. "Who Acts More Like a Game Theorist? Group and Individual Play in a Sequential Market Game and the Effect of the Time Horizon," Working Papers who_acts_more_like_a_game, Max Planck Institute for Tax Law and Public Finance.
  • Handle: RePEc:mpi:wpaper:who_acts_more_like_a_game_theorist
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    Cited by:

    1. repec:eee:soceco:v:72:y:2018:i:c:p:28-39 is not listed on IDEAS
    2. Haoran He & Marie Claire Villeval, 2014. "Are teams less inequality averse than individuals?," Post-Print halshs-01077253, HAL.
    3. repec:eee:jeborg:v:138:y:2017:i:c:p:111-124 is not listed on IDEAS
    4. Hildenbrand, Andreas, 2013. "Is a firm a firm? A Stackelberg experiment," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-26.
    5. Haoran He & Marie Claire Villeval, 2014. "Are team members less inequality averse than individual decision makers?," Working Papers halshs-00996545, HAL.
    6. Balafoutas, Loukas & Kerschbamer, Rudolf & Kocher, Martin & Sutter, Matthias, 2014. "Revealed distributional preferences: Individuals vs. teams," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 319-330.
    7. Thum, Marcel & Auerswald, Heike & Schmidt, Carsten & Torsvik, Gaute, 2014. "Teams Contribute More and Punish Less," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100537, Verein für Socialpolitik / German Economic Association.
    8. Cason, Timothy N. & Mui, Vai-Lam, 2015. "Individual versus Group Play in the Repeated Coordinated Resistance Game," Journal of Experimental Political Science, Cambridge University Press, vol. 2(01), pages 94-106, March.
    9. He, Haoran & Villeval, Marie Claire, 2017. "Are group members less inequality averse than individual decision makers?," Journal of Economic Behavior & Organization, Elsevier, vol. 138(C), pages 111-124.
    10. Kamei, Kenju, 2017. "Altruistic Norm Enforcement and Decision-Making Format in a Dilemma: Experimental Evidence," MPRA Paper 76641, University Library of Munich, Germany.
    11. Max Albert & Andreas Hildenbrand, 2016. "Industrial Organization and Experimental Economics: How to Learn from Laboratory Experiments," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 33(1), pages 135-156, August.
    12. Messinger, Paul R., 2016. "The role of fairness in competitive supply chain relationships: An experimental studyAuthor-Name: Choi, Sungchul," European Journal of Operational Research, Elsevier, vol. 251(3), pages 798-813.
    13. Raimo P. Hämäläinen & Ilkka Leppänen, 2017. "Cheap talk and cooperation in Stackelberg games," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 25(2), pages 261-285, June.

    More about this item

    Keywords

    Stackelberg market; groups versus individuals; discontinuity effect; experiment;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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