IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Who Acts More Like a Game Theorist? Group and Individual Play in a Sequential Market Game and the Effect of the Time Horizon

  • Wieland Mueller
  • Fangfang Tan

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.

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.

File URL: http://www.tax.mpg.de/RePEc/mpi/wpaper/Tax-MPG-RPS-2011-15.pdf
File Function: Full text (original version)
Download Restriction: no

Paper provided by Max Planck Institute for Tax Law and Public Finance in its series Working Papers with number who_acts_more_like_a_game_theorist.

as
in new window

Length: 38 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:mpi:wpaper:who_acts_more_like_a_game_theorist
Contact details of provider: Postal: Marstallplatz 1, 80539 München
Phone: +49 89 24246 0
Fax: +49 89 24246 501
Web page: http://www.tax.mpg.de/

More information through EDIRC

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.:

as in new window
  1. David Kreps & Paul Milgrom & John Roberts & Bob Wilson, 2010. "Rational Cooperation in the Finitely Repeated Prisoners' Dilemma," Levine's Working Paper Archive 239, David K. Levine.
  2. Cason, Timothy N & Mui, Vai-Lam, 1997. "A Laboratory Study of Group Polarisation in the Team Dictator Game," Economic Journal, Royal Economic Society, vol. 107(444), pages 1465-83, September.
  3. Kocher, Martin G. & Sutter, Matthias, 2005. "The decision maker matters: Individual versus group behaviour in experimental beauty-contest games," Munich Reprints in Economics 18213, University of Munich, Department of Economics.
  4. Kocher, Martin & Matthias Sutter, 2003. "Individual versus group behavior and the role of the decision making procedure in gift-exchange experiments," Royal Economic Society Annual Conference 2003 125, Royal Economic Society.
  5. Gary Bornstein & Tamar Kugler & Anthony Ziegelmeyer, 2002. "Individual and Group Decisions in the Centipede Game: Are Groups More “Rational” Players?," Discussion Paper Series dp298, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  6. David J. Cooper & John H. Kagel, 2005. "Are Two Heads Better Than One? Team versus Individual Play in Signaling Games," American Economic Review, American Economic Association, vol. 95(3), pages 477-509, June.
  7. Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
  8. Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers 016, Institute for Empirical Research in Economics - University of Zurich.
  9. repec:ebl:ecbull:v:3:y:2002:i:3:p:1-7 is not listed on IDEAS
  10. Cox, James C. & Friedman, Daniel & Sadiraj, Vjollca, 2009. "Revealed Altruism," Santa Cruz Department of Economics, Working Paper Series qt6rb5t4mc, Department of Economics, UC Santa Cruz.
  11. Feri, Francesco & Irlenbusch, Bernd & Sutter, Matthias, 2008. "Efficiency Gains from Team-Based Coordination: Large-Scale Experimental Evidence," IZA Discussion Papers 3741, Institute for the Study of Labor (IZA).
  12. Matthias Sutter & Martin G. Kocher & Sabine Strauss, 2009. "Individuals and teams in auctions," Oxford Economic Papers, Oxford University Press, vol. 61(2), pages 380-394, April.
  13. Sau-Him Paul Lau & Felix Leung, 2010. "Estimating a Parsimonious Model of Inequality Aversion in Stackelberg Duopoly Experiments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(5), pages 669-686, October.
  14. Reuben, Ernesto & Suetens, Sigrid, 2009. "Revisiting Strategic versus Non-Strategic Cooperation," IZA Discussion Papers 4107, Institute for the Study of Labor (IZA).
  15. Milgrom, Paul & Roberts, John, 1982. "Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis," Econometrica, Econometric Society, vol. 50(2), pages 443-59, March.
  16. Alexander Elbittar & Andrei Gomberg & Laura Sour, 2004. "Group Decision-Making in Ultimatum Bargaining: An Experimental Study," Working Papers 0407, Centro de Investigacion Economica, ITAM.
  17. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  18. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
  19. Cox, James C. & Friedman, Daniel & Gjerstad, Steven, 2007. "A tractable model of reciprocity and fairness," Games and Economic Behavior, Elsevier, vol. 59(1), pages 17-45, April.
  20. Gary Charness & Matthias Sutter, 2012. "Groups Make Better Self-Interested Decisions," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 157-76, Summer.
  21. James Andreoni & John H Miller, 1997. "Rational Cooperation in the finitely repeated prisoner's dilemma: experimental evidence," Levine's Working Paper Archive 670, David K. Levine.
  22. Kugler, Tamar & Bornstein, Gary & Kocher, Martin G. & Sutter, Matthias, 2007. "Trust between individuals and groups: Groups are less trusting than individuals but just as trustworthy," Munich Reprints in Economics 18202, University of Munich, Department of Economics.
  23. Gary Bornstein & Uri Gneezy, 2002. "Price Competition Between Teams," Experimental Economics, Springer, vol. 5(1), pages 29-38, June.
  24. Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2001. "Stackelberg Beats Cournot: On Collusion and Efficiency in Experimental Markets," Economic Journal, Royal Economic Society, vol. 111(474), pages 749-65, October.
  25. Luhan, W.J. & Kocher, Martin G. & Sutter, Matthias, 2009. "Group polarization in the team dictator game reconsidered," Munich Reprints in Economics 18216, University of Munich, Department of Economics.
  26. Gary Bornstein & Ilan Yaniv, 1998. "Individual and Group Behavior in the Ultimatum Game: Are Groups More “Rational†Players?," Experimental Economics, Springer, vol. 1(1), pages 101-108, June.
  27. Gillet, Joris & Schram, Arthur & Sonnemans, Joep, 2009. "The tragedy of the commons revisited: The importance of group decision-making," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 785-797, June.
  28. Tamar Kugler & Edgar E. Kausel & Martin G. Kocher, 2012. "Are Groups more Rational than Individuals? A Review of Interactive Decision Making in Groups," CESifo Working Paper Series 3701, CESifo Group Munich.
  29. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  30. Philippe Raab & Burkhard C. Schipper, 2004. "Cournot Competition between Teams: An Experimental Study," Bonn Econ Discussion Papers bgse13_2004, University of Bonn, Germany.
  31. Gillet, Joris & Schram, Arthur & Sonnemans, Joep, 2011. "Cartel formation and pricing: The effect of managerial decision-making rules," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 126-133, January.
  32. Ronald Bosman & Heike Hennig-Schmidt & Frans vanWinden, 2002. "Exploring Group Behavior in a Power-to-Take Video Experiment," Bonn Econ Discussion Papers bgse7_2002, University of Bonn, Germany, revised May 2002.
  33. Gary Bornstein & David V. Budescu & Tamar Kugler & Reinhard Selten, 2002. "Repeated Price Competition Between Individuals and Between Teams," Discussion Paper Series dp303, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  34. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
  35. James C. Cox & Stephen C. Hayne, . "Barking Up the Right Tree: Are Small Groups Rational Agents?," Experimental Economics Center Working Paper Series 2006-02, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  36. Robert, Christopher & Carnevale, Peter J., 1997. "Group Choice in Ultimatum Bargaining," Organizational Behavior and Human Decision Processes, Elsevier, vol. 72(2), pages 256-279, November.
  37. Engel, Christoph, 2010. "The behaviour of corporate actors: How much can we learn from the experimental literature?," Journal of Institutional Economics, Cambridge University Press, vol. 6(04), pages 445-475, December.
  38. Holt, Charles A, 1985. "An Experimental Test of the Consistent-Conjectures Hypothesis," American Economic Review, American Economic Association, vol. 75(3), pages 314-25, June.
  39. Steffen Huck & Brian Wallace, 2002. "Reciprocal strategies and aspiration levels in a Cournot-Stackelberg experiment," Economics Bulletin, AccessEcon, vol. 3(3), pages 1-7.
  40. Fei Song, 2006. "Trust and reciprocity in inter-individual versus inter-group interactions: The effects of social influence, group dynamics, and perspective biases," Experimental Economics, Springer, vol. 9(2), pages 179-180, June.
  41. Ronald Bosman & Heike Hennig-Schmidt & Frans Winden, 2006. "Exploring group decision making in a power-to-take experiment," Experimental Economics, Springer, vol. 9(1), pages 35-51, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mpi:wpaper:who_acts_more_like_a_game_theorist. 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: (Hans Mueller)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.