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Signaling Without Common Prior: An Experiment

  • Michalis Drouvelis
  • Wieland Muller
  • Alex Possajennikov

The common prior assumption is pervasive in game-theoretic models with incomplete information. This paper investigates experimentally the importance of inducing a common prior in a two-person signaling game. For a specific probability distribution of the sender's type, the long-run behavior without an induced common prior is shown to be different from the behavior when a common prior is induced, while for other distributions behavior is similar under both regimes. We also present a learning model that allows players to learn about the other players' strategies and the prior distribution of the sender's type. We show that this learning model accurately accounts for all main features of the data.

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Paper provided by Department of Economics, University of York in its series Discussion Papers with number 09/08.

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Date of creation: Apr 2009
Date of revision:
Handle: RePEc:yor:yorken:09/08
Contact details of provider: Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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  1. Banks Jeffrey & Camerer Colin & Porter David, 1994. "An Experimental Analysis of Nash Refinements in Signaling Games," Games and Economic Behavior, Elsevier, vol. 6(1), pages 1-31, January.
  2. Dekel, Eddie & Fudenberg, Drew & Levine, David, 2004. "Learning to Play Bayesian Games," Scholarly Articles 3200612, Harvard University Department of Economics.
  3. David J. Cooper & Susan Garvin & John H. Kagel, 1997. "Signalling and Adaptive Learning in an Entry Limit Pricing Game," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 662-683, Winter.
  4. Brandts, Jordi & Holt, Charles A, 1992. "An Experimental Test of Equilibrium Dominance in Signaling Games," American Economic Review, American Economic Association, vol. 82(5), pages 1350-65, December.
  5. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  6. Oechssler, Jorg & Schipper, Burkhard, 2003. "Can you guess the game you are playing?," Games and Economic Behavior, Elsevier, vol. 43(1), pages 137-152, April.
  7. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  8. Miguel Costa-Gomes & Vincent P. Crawford & Bruno Broseta, . "Cognition and Behavior in Normal-Form Games:An Experimental Study," Discussion Papers 00/45, Department of Economics, University of York.
  9. Werner Güth & Radosveta Ivanova-Stenzel, . "Asymmetric Auction Experiments With(out) Commonly Known Beliefs," Papers on Strategic Interaction 2002-36, Max Planck Institute of Economics, Strategic Interaction Group.
  10. Christopher M. Anderson & Colin F. Camerer, 2000. "Experience-weighted attraction learning in sender-receiver signaling games," Economic Theory, Springer, vol. 16(3), pages 689-718.
  11. Brandts, Jordi & Holt, Charles A, 1993. "Adjustment Patterns and Equilibrium Selection in Experimental Signaling Games," International Journal of Game Theory, Springer, vol. 22(3), pages 279-302.
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