Drift effect and timing without observability: experimental evidence
We provide experimental evidence to Binmore and Samuelson’s (1999) insights for modeling the learning process through which equilibrium is selected. They proposed the concept of drift to describe the effect of perturbations on the dynamic process leading to equilibrium in evolutionary games with boundedly rational agents. We test within a random matched population two different versions of the Dalek game where the forward induction equilibrium weakly iterately dominates the other Nash equilibrium in pure strategies. We also assume that the first mover makes her decision first (“timing”) but the second mover is not informed of the first mover's choice (“lack of observability”). Both players are informed of their position in the sequence and of the fact that the second player will decide without knowing the decision of the first player. If the actual observed choices are only those made by other players in previous interactions, the role played by forward induction is replaced with the learning process taking place within the population. Our results support Binmore and Samuelson’s model because the frequency of the forward induction outcome is payoff-sensitive: it strongly increases when we impose a slight change in the payoffs that does not change equilibrium predictions. This evidence reinforces the evolutionary nature of the drift effect.
|Date of creation:||Oct 2003|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.deps.unisi.it/
More information through EDIRC
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.:
- Camerer, Colin F. & Knez, Marc & Weber, Roberto A., 1996. "Timing and Virtual Observability in Ultimatum Bargaining and Weak Link Coordination Games," Working Papers 970, California Institute of Technology, Division of the Humanities and Social Sciences.
- Balkenborg, Dieter, 1994. "An Experiment on Forward- versus Backward Induction," Discussion Paper Serie B 268, University of Bonn, Germany.
- Ellison, Glenn, 1993.
"Learning, Local Interaction, and Coordination,"
Econometric Society, vol. 61(5), pages 1047-71, September.
- Binmore, Ken & McCarthy, John & Ponti, Giovanni & Samuelson, Larry & Shaked, Avner, 2002.
"A Backward Induction Experiment,"
Journal of Economic Theory,
Elsevier, vol. 104(1), pages 48-88, May.
- Brandts, Jordi & Holt, Charles A., 1995. "Limitations of dominance and forward induction: Experimental evidence," Economics Letters, Elsevier, vol. 49(4), pages 391-395, October.
- Cooper, Russell & De Jong, Douglas V. & Forsythe, Robert & Ross, Thomas W., 1992. "Forward induction in coordination games," Economics Letters, Elsevier, vol. 40(2), pages 167-172, October.
- E. Kohlberg & J.-F. Mertens, 1998.
"On the Strategic Stability of Equilibria,"
Levine's Working Paper Archive
445, David K. Levine.
- Friedman, Daniel, 1996. "Equilibrium in Evolutionary Games: Some Experimental Results," Economic Journal, Royal Economic Society, vol. 106(434), pages 1-25, January.
- repec:att:wimass:9529 is not listed on IDEAS
- Amnon Rapoport, 1997. "Order of Play in Strategically Equivalent Games in Extensive Form," International Journal of Game Theory, Springer, vol. 26(1), pages 113-136.
- Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993.
"Learning, Mutation, and Long Run Equilibria in Games,"
Econometric Society, vol. 61(1), pages 29-56, January.
- M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
- Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
- Giovanni Ponti, 1996.
"Cycles of Learning in the Centipede Game,"
96-22 ISSN 1350-6722, University College London, Department of Economics.
- Binmore, Ken & Samuelson, Larry, 1999. "Evolutionary Drift and Equilibrium Selection," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 363-93, April.
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, June.
- Cooper, Russell & Douglas V. DeJong & Robert Forsythe & Thomas W. Ross, 1993. "Forward Induction in the Battle-of-the-Sexes Games," American Economic Review, American Economic Association, vol. 83(5), pages 1303-16, December.
- Uriarte Ayo, José Ramón, 2003. "A Model of Evolutionay Drift," IKERLANAK 2003-01, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
- Binmore, K. & Samuelson, L., 1997.
"Evolutionary Drift and Equilibrium Selection,"
9729r, Wisconsin Madison - Social Systems.
- Amershi Amin H. & Sadanand Asha & Sadanand Venkatraman, 1992. "Player importance and forward induction," Economics Letters, Elsevier, vol. 38(3), pages 291-297, March.
- Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
- R. Muller & Asha Sadanand, 2003. "Order of Play, Forward Induction, and Presentation Effects in Two-Person Games," Experimental Economics, Springer, vol. 6(1), pages 5-25, June.
- Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
- Guth, Werner & Huck, Steffen & Rapoport, Amnon, 1998. "The limitations of the positional order effect: Can it support silent threats and non-equilibrium behavior?," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 313-325, February.
When requesting a correction, please mention this item's handle: RePEc:usi:wpaper:405. 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: (Fabrizio Becatti)
If references are entirely missing, you can add them using this form.