Coordination under Limited Depth of Reasoning

This paper provides the first unified explanation of behavior in coordinated attack games under both public and private information. It demonstrates that the main experimental results, such as threshold strategies, comparative statics, and the differences in behavior under public and private information, are robust predictions of limited depth of reasoning models. This is in contrast to equilibrium, which mispredicts the coordinating roles of public and private information. The analysis has implications for understanding macroeconomic phenomena, like currency attacks and debt crises, which are commonly modeled using incomplete information coordinated attack games

Equilibrium Selection Through Incomplete Information in Coordination Games: An Experimental Study

We perform an experiment on a pure coordination game with uncertainty about the payoffs. Our game is closely related to models that have been used in many macroeconomic and financial applications to solve problems of equilibrium indeterminacy. In our experiment, each subject receives a noisy signal about the true payoffs. This game (inspired by the “global” games of Carlsson and van Damme, Econometrica, 61, 989–1018, 1993) has a unique strategy profile that survives the iterative deletion of strictly dominated strategies (thus a unique Nash equilibrium). The equilibrium outcome coincides, on average, with the risk-dominant equilibrium outcome of the underlying coordination game. In the baseline game, the behavior of the subjects converges to the theoretical prediction after enough experience has been gained. The data (and the comments) suggest that this behavior can be explained by learning. To test this hypothesis, we use a different game with incomplete information, related to a complete information game where learning and prior experiments suggest a different behavior. Indeed, in the second treatment, the behavior did not converge to equilibrium within 50 periods in some of the sessions.We also run both games under complete information. The results are sufficiently similar between complete and incomplete information to suggest that risk-dominance is also an important part of the explanation.Publicad

Averting economic collapse and the solipsism bias

We study the behavior of experimental subjects who have to make a sequence of risky investment decisions in the presence of network externalities. Subjects follow a simple heuristic-investing after positive experiences and reducing their propensity to invest after a failure. This result contrasts with the theoretical findings of Jeitschko and Taylor [Jeitschko, T.D., Taylor, C., 2001. Local discouragement and global collapse: A theory of coordination avalanches. Amer. Econ. Rev. 91 (1), 208-224] in which even agents who have only good experiences eventually stop investing because they account for the fact that others with worse experiences will quit. This can trigger sudden economic collapse-a coordination avalanche-even in the most efficient Bayesian equilibrium. In the experiment, subjects follow their own experiences and disregard the possible bad experiences of others-thus exhibiting behavior that we term "solipsism bias." Solipsism results in sustained investment activity and thus averts complete collapse. (c) 2005 Elsevier Inc. All rights reserved

Bringing tasks back in: an organizational theory of resource complementarity and partner selection

To progress beyond the idea that the value of inter-firm collaboration is largely determined by the complementarity of the resources held by partners, we build a theoretical framework that explains under which conditions a set of resources or capabilities can be considered as complementary and resulting in superior value creation. Specifically, we argue that the tasks that an inter-firm collaboration has to perform determine complementarities, and that complementarities arise from similar and dissimilar resources alike. We capture this relationship in the concept of task resource complementarity. Further, we examine factors that impact on the relevance of this construct as a predictor of partner selection. Finally, we discuss which implications arise for a theory of the firm when tasks are explicitly incorporated into the conceptualization of resource complementarity

Positive expectations feedback experiments and number guessing games as models of financial markets (revised version of WP 08-07)

In repeated number guessing games choices typically converge quickly to the Nash equilibrium. In positive expectations feedback experiments, however, convergence to the equilibrium price tends to be very slow, if it occurs at all. Both types of experimental designs have been suggested as modeling essential aspects of financial markets. In order to isolate the source of the differences in outcomes we present several new treatments in this paper. We conclude that the feedback strength (i.e. the ‘p-value’ in standard number guessing games) is essential for the results. Furthermore, positive expectations feedback experiments may provide good representations of highly speculative markets while standard number guessing games model financial markets with more emphasis on dividend yield and value stocks.

Free Speech and National Security Bootstraps

It is troubling that courts treat administrative designations—specifically, both FTO determinations and information classification—as bootstraps by which to yank speech restrictions from the clutches of probing judicial scrutiny. This Article builds on existing scholarly critiques to identify and examine the common thread of national security bootstrapping that runs through both sets of cases. The hope is that in so doing, some greater light may be shed both on the cases themselves and, more broadly, on the costs and benefits of judicial deference to executive national security claims where civil rights and civil liberties are at stake

Pre-Twombly Precedent: Have Leatherman and Swierkiewicz Earned Retirement Too?

In theory, a complaint is a relatively minor part of a lawsuit, intended to initiate the litigation process. In practice, federal courts are struggling to implement the Supreme Court’s opinions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. This struggle is due, in part, to the fact that neither Twombly nor Iqbal expressly overruled the Court’s pre-Twombly pleading jurisprudence. This Note focuses on how lower courts are assessing the continued vitality of two major pre-Twombly cases: Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit and Swierkiewicz v. Sorema N.A. It finds that lower courts are taking conflicting views on the status of pre-Twombly precedent and concludes that this discord has serious consequences for litigation costs, respect for stare decisis, and litigants’ access to justice

How portable is level-0 behavior? A test of level-k theory in game with non-neutral frames

We test the portability of level-0 assumptions in level-k theory in an experimental investigation of behavior in Coordination, Discoordination, and Hide and Seek games with common, non-neutral frames. Assuming that level-0 behavior depends only on the frame, we derive hypotheses that are independent of prior assumptions abou tsalience. Those hypotheses are not confirmed. Our findings contrast with previous research which has fitted parameterized level-k models to Hide and Seek data. We show that, as a criterion of successful explanation, the existence of a plausible model that replicates the main patterns in these data has a high probability of false positives

Understanding inter-organizational decision coordination

This article develops a theoretical framework to investigate the interaction and coordination of decision-making processes in a supply chain with multiple and inter-dependent suppliers and customers. Design/Methodology/Approach: Three longitudinal case studies on the decision coordination processes between a European toy supplier and three retailers. Findings: The case studies found different mental models, decision-making behaviours, coordination behaviours and ordering behaviours even though the toy supplier and the three retailers observed quite the same material flow behaviours. The study found explanations for these diverse behaviours by analyzing the mental models and decision-making behaviours of each involved party. Originality/value: The findings explain the conditions which lead to undesirable mental models and decision-making behaviours which affect the coordination of decisions among supply chain members