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Chapter 34 Coordination Success in Non-cooperative Large Group Market Entry Games

Published on Jan 1, 2008
· DOI :10.1016/S1574-0722(07)00034-0
Amnon Rapoport49
Estimated H-index: 49
(UA: University of Arizona),
Darryl A. Seale18
Estimated H-index: 18
(UNLV: University of Nevada, Las Vegas)
Abstract
Publisher Summary Subsequent experimental studies of the market entry game and his associates, which systematically manipulated the information structure of the game, compared behavior in the domains of gains and losses, or introduced private information and asymmetry between players, have shown that this “magic” is robust. Under a wide variety of experimental conditions, interacting players in large groups playing the market entry game with no communication among them rapidly achieve coordination success that is accounted for on the aggregate level by a Pareto deficient equilibrium solution. When the entry fee is private information, and only the distribution of entry fees in the population is known, the effects of asymmetry between players can be studied. Whether players are symmetric or not, each player is faced on each period with a binary choice between earning a fixed payoff, regardless of the actions taken by the other players, or an uncertain payoff which is a linear function of the difference cm.
  • References (13)
  • Citations (1)
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References13
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#1Amnon Rapoport (UA: University of Arizona)H-Index: 49
#2Darryl A. Seale (UNLV: University of Nevada, Las Vegas)H-Index: 18
Last. Eyal Winter (HUJI: Hebrew University of Jerusalem)H-Index: 27
view all 3 authors...
We study a class of large-group, noncooperative, iterated market entry games with complete information, binary choices, and asymmetric players in which the incentive of each player to enter the market decreases the larger the number of entrants. Experimental results from two different studies show remarkable coordination on the aggregate level, which is accounted for successfully by the Nash equilibrium solution. The equilibrium solution is less successful in accounting for the differences among...
64 CitationsSource
#1Terry E. Daniel (U of A: University of Alberta)H-Index: 5
#2Darryl A. Seale (UAH: University of Alabama in Huntsville)H-Index: 18
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Abstract We report the results of two experiments on bilateral bargaining under the sealed-bid double auction mechanism in environments where theory calls for decidedly strategic play. The observed individual sellers' ask functions and buyers' bid functions, each based on 50 rounds of bargaining, are shown to be in good agreement with the Bayesian–Nash piecewise linear equilibrium solution of Chatterjee & Samuelson (1983). Although the game is played with random matching of traders on each round...
43 CitationsSource
#1Ido Erev (Technion – Israel Institute of Technology)H-Index: 42
#2Amnon Rapoport (UA: University of Arizona)H-Index: 49
Abstract Previous experimental studies have documented quick convergence to equilibrium play in market entry games with a large number of agents. The present study examines the effect of the available information in a 12-player game in an attempt to account for these findings. In line with the prediction of a simple reinforcement learning model (Roth and Erev, 1995, Games Econ. Behav. 8 , 164–212), quick convergence to equilibrium is observed even given minimal information (unknown payoff rule)....
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Abstract We report the results of two experiments designed to study tacit coordination in a class of market entry games with linear payoff functions, binary decisions, and zero entry costs, in which each of n = 20 players must decide on each trial whether or not to enter a market whose capacity is public knowledge. The results show that although the subjects differ considerably from one another in their decision policies, tacit coordination emerges quickly on the aggregate level and is accounted...
102 CitationsSource
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Quantitatively trained Ph.D. students participated in three replications of a 20-trial market entry game in which each agent has two pure strategies—to “enter the market” or “stay out of the market”—and the individual payoff depends on the size of the set of active agents entering the market. With experience, subjects adhered more strictly to pure strategies, which although markedly different from one to the other combined to form distributions supporting a Nash equilibrium solution to the game.
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