Who acts more like a game theorist? Group and indivdual play in a sequential market game and the effect of the time horizon

W. Müller, F. Tan

Research output: Contribution to journalArticleScientificpeer-review

14 Citations (Scopus)

Abstract

Previous experimental results on one-shot sequential two-player games show that group decisions are closer to the subgame-perfect Nash equilibrium than individual decisions. We extend the analysis of intergroup versus interindividual decision-making by running both one-shot and repeated sessions of a simple two-player sequential market game (Stackelberg duopoly). Whereas in one-shot markets we find no significant differences in the behavior of groups and individuals, in repeated markets we find 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), the matching protocol (random- or fixed-matching), and the econometric method used to account for observed first- and second-mover behavior. We discuss various possible explanations for the differential effect that the time horizon of interaction has on the extent of individual and group playersʼ (non)conformity with subgame perfectness.
Original languageEnglish
Pages (from-to)658-674
JournalGames and Economic Behavior
Volume82
DOIs
Publication statusPublished - 2013

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