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Using or Hiding Private Information? An experimental Study of Zero-Sum Repeated Games with Incomplete Information

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Abstract

This paper studies experimentally the value of private information in strictly competitive interactions with asymmetric information. We implement in the laboratory three examples from the class of zero-sum repeated games with incomplete information on one side and perfect monitoring. The stage games share the same simple structure, but differ markedly on how information should be optimally used once they are repeated. Despite the complexity of the optimal strategies, the empirical value of information coincides with the theoretical prediction in most instances. In particular, it is never negative, it decreases with the number of repetitions, and it is nicely bounded below by the value of the infinitely repeated game and above by the value of the one-shot game. Subjects are unable to completely ignore their information when it is optimal to do so, but the use of information in the lab reacts qualitatively well to the type and length of the game being played

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  • Nicolas Jacquemet & Frédéric Koessler, 2011. "Using or Hiding Private Information? An experimental Study of Zero-Sum Repeated Games with Incomplete Information," Documents de travail du Centre d'Economie de la Sorbonne 11002, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  • Handle: RePEc:mse:cesdoc:11002
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    Cited by:

    1. Laurent Denant-Boemont & Olivier L’Haridon, 2013. "La rationalité à l'épreuve de l'économie comportementale," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 35-89.
    2. Wen, Yuanji, 2018. "Voluntary information acquisition in an asymmetric-Information game:comparing learning theories in the laboratory," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 202-219.

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    More about this item

    Keywords

    Concavification; laboratory experiments; incomplete information; value of information; zero-sum repeated games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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