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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 Rapoport48
Estimated H-index: 48
(UA: University of Arizona),
Darryl A. Seale17
Estimated H-index: 17
(UNLV: University of Nevada, Las Vegas)
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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
Newest
Published on Apr 1, 2002in Games and Economic Behavior1.00
Amnon Rapoport48
Estimated H-index: 48
(UA: University of Arizona),
Darryl A. Seale17
Estimated H-index: 17
(UNLV: University of Nevada, Las Vegas),
Eyal Winter25
Estimated H-index: 25
(HUJI: Hebrew University of Jerusalem)
Abstract 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 differen...
Published on Jun 1, 1998in Journal of Mathematical Psychology3.02
Terry E. Daniel5
Estimated H-index: 5
(U of A: University of Alberta),
Darryl A. Seale17
Estimated H-index: 17
(UAH: University of Alabama in Huntsville),
Amnon Rapoport48
Estimated H-index: 48
(UA: University of Arizona)
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...
Published on May 1, 1998in Games and Economic Behavior1.00
Ido Erev40
Estimated H-index: 40
(Technion – Israel Institute of Technology),
Amnon Rapoport48
Estimated H-index: 48
(UA: University of Arizona)
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)....
James A. Sundali9
Estimated H-index: 9
,
Amnon Rapoport48
Estimated H-index: 48
,
Darryl A. Seale17
Estimated H-index: 17
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...
Published on Mar 1, 1995in Group Decision and Negotiation2.01
Amnon Rapoport48
Estimated H-index: 48
(UA: University of Arizona)
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.
Published on Jan 1, 1995in Games and Economic Behavior1.00
Alvin E. Roth76
Estimated H-index: 76
(University of Pittsburgh),
Ido Erev40
Estimated H-index: 40
(University of Pittsburgh)
We use simple learning models to track the behavior observed in experiments concerning three extensive form games with similar perfect equilibria. In only two of the games does observed behavior approach the perfect equilibrium as players gain experience. We examine a family of learning models which possess some of the robust properties of learning noted in the psychology literature. The intermediate term predictions of these models track well the observed behavior in all three games, even thoug...
Published on Jul 1, 1993in Games and Economic Behavior1.00
John B. Van Huyck19
Estimated H-index: 19
,
Raymond C. Battalio31
Estimated H-index: 31
,
Richard O. Beil6
Estimated H-index: 6
Abstract In this paper, we explore the possibility that asset markets provide a means of tacit communication, which may allow subjects to coordinate on the payoff-dominant equilibrium in an underlying coordination game. We find that the existence of a market price for the right to play does communicate information about the equilibrium selection problem. Specifically, behavior never converged to the efficient outcome when subjects were endowed with the right to participate, but always converged ...
Published on Aug 1, 1991in Quarterly Journal of Economics11.78
John B. Van Huyck19
Estimated H-index: 19
(A&M: Texas A&M University),
Raymond C. Battalio31
Estimated H-index: 31
(A&M: Texas A&M University),
Richard O. Beil6
Estimated H-index: 6
(AU: Auburn University)
Deductive equilibrium analysis often fails to provide a unique equilibrium solution in many situations of strategic interdependence. Consequently, a theory of equilibrium selection would be a useful complement to the theory of equilibrium points. A salient equilibrium selection principle would allow decision makers to implement a mutual best response outcome. This paper uses the experimental method to examine the salience of payoff-dominance, security, and historical precedents in related averag...
Published on Jan 1, 1990in The American Economic Review4.10
John B. Van Huyck19
Estimated H-index: 19
,
Raymond C. Battalio31
Estimated H-index: 31
,
Richard O. Beil6
Estimated H-index: 6
Combined apparatus for the biological purification of waste waters by means of activated sludges, which comprises at least two coupled clarification tanks which are in communication with an aerator tank as well as means for recycling the settled sludges coming from the clarification tanks into the aerator tank, characterized by the fact that the means for recycling the settled sludges consist of air pumps of the "air-lift" type which discharge into the aerator from each of the clarifiers and whi...
Published on Jan 1, 1988
Reinhard Tietz7
Estimated H-index: 7
,
Wulf Albers7
Estimated H-index: 7
,
Reinhard Selten45
Estimated H-index: 45
Cited By1
Newest
Published on Jul 1, 2015in American Journal of Agricultural Economics2.53
Jorge Holzer2
Estimated H-index: 2
(UMD: University of Maryland, College Park)
Formal property rights are typically established after considerable waste has occurred, despite the effectiveness of such schemes in addressing the inefficiencies of common pool resources. Adoption can be contentious because of the assignment of wealth and political influence that accompany the transition to exclusive property rights. This paper studies how the early involvement of harvesters in policy implementation designed to address the commons’ inefficiency may foster perceived legitimacy a...
View next paperEquilibrium point selection in a class of market entry games