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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

Previous experimental results on one-shot sequential two-player games show that group de- cisions 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 ?nd no signi?cant di¤erences in the behavior of groups and individuals, we ?nd 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 ?rst- and second- mover behavior. We provide evidence on followers?response functions and electronic chats to o¤er an explanation for the di¤erential e¤ect that the time horizon of interaction has on the extent of individual and group players?(non)conformity with subgame perfectness.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1111.

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Date of creation: Sep 2011
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Handle: RePEc:vie:viennp:1111
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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