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Noisy leadership : An experimental approach

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  • Güth, W.
  • Müller, W.

    (Tilburg University, School of Economics and Management)

  • Spiegel, Y.

Abstract

We examine the strategic behavior of leaders and followers in sequential duopoly experiments in which followers either perfectly observe the leaders’ actions or else observe nothing. Our experiments show that consistent with the theory, leaders enjoy a greater …rst-mover advantage when followers observe their actions with higher probability. However, the results also show that (i) leaders do not fully exploit their …rst-mover advantage, (ii) when informed, followers tend to overreact slightly (i.e., choose quantities above their best-response to the leaders’ quantities), and (iii) when uninformed, followers try to predict leaders’ quantities and react optimally. This suggests that followers view the symmetric Cournot outcome as “fair” and whenever they observe leaders who are trying to exploit their …rst-mover advantage, they “punish” them by overreacting. Such punishments in turn induce leaders to behave more softly than the theory predicts.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Güth, W. & Müller, W. & Spiegel, Y., 2006. "Noisy leadership : An experimental approach," Other publications TiSEM e4796461-8862-4085-a867-8, Tilburg University, School of Economics and Management.
  • Handle: RePEc:tiu:tiutis:e4796461-8862-4085-a867-8934e11fbe6f
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    File URL: https://pure.uvt.nl/portal/files/780887/Noisy.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Anders Poulsen & Michael Roos, 2010. "Do people make strategic commitments? Experimental evidence on strategic information avoidance," Experimental Economics, Springer;Economic Science Association, pages 206-225.
    2. Anders Poulsen & Jonathan Tan, 2007. "Information acquisition in the ultimatum game: An experimental study," Experimental Economics, Springer;Economic Science Association, vol. 10(4), pages 391-409, December.
    3. de Haan, Thomas & Offerman, Theo & Sloof, Randolph, 2011. "Noisy signaling: Theory and experiment," Games and Economic Behavior, Elsevier, vol. 73(2), pages 402-428.
    4. S.N. O'Higgins & Arturo Palomba & Patrizia Sbriglia, 2010. "Second Mover Advantage and Bertrand Dynamic Competition: An Experiment," Labsi Experimental Economics Laboratory University of Siena 028, University of Siena.
    5. Poulsen, Anders, 2007. "Learning to Make Strategic Moves: Experimental Evidence," MPRA Paper 10927, University Library of Munich, Germany.
    6. 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.
    7. Tanja H�rtnagl & Rudolf Kerschbamer, 2014. "How the Value of Information Shapes the Value of Commitment Or: Why the Value of Commitment Does Not Vanish," Working Papers 2014-03, Faculty of Economics and Statistics, University of Innsbruck.
    8. Claude Meidinger & Marie Claire Villeval, 2002. "Leadership in Teams: Signaling or Reciprocating ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00178474, HAL.
    9. Anders U. Poulsen & Michael V. M. Roos, 2009. "Do People Make Strategic Moves? Experimental Evidence on Strategic Information Avoidance," Discussion Papers 09-06, University of Copenhagen. Department of Economics.
    10. Hildenbrand, Andreas, 2010. "Cournot or Stackelberg competition? A survey on experimental evidence," MPRA Paper 24468, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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