You Better Play 7: Mutual versus Common Knowledge of Advice in a Weak-link Experiment

This paper presents the results of an experiment on mutual versus common knowl- edge of advice in a two-player weak-link game with random matching. Our experimen- tal subjects play in pairs for thirteen rounds. After a brief learning phase common to all treatments, we vary the knowledge levels associated with external advice given in the form of a suggestion to pick the strategy supporting the payoff-dominant equilib- rium. In the mutual knowledge of level 1 treatment, the suggestion appears on every subject's monitor at the beginning of every round, with no common knowledge that everybody sees the same suggestion. In the mutual knowledge of level 2 treatment, the same suggestion appears on each subject's monitor, accompanied by the request to "send" the suggestion to the partner in the round, followed by a notification that the message has been read. Finally, in the common knowledge treatment, the suggestion is read aloud by the experimenter at the end of the learning phase. Our results are somewhat surprising and can be summarized as follows: in all our treatments both the choice of the efficiency-inducing action and the percentage of efficient equilibrium play are higher with respect to the control treatment, revealing that even a condition as weak as mutual knowledge of level 1 is sufficient to significantly increase the salience of the efficient equilibrium with respect to the absence of advice. Furthermore, and contrary to our hypothesis, mutual knowledge of level 2 (as the one occurring in our "message" treatment) induces successful coordination more frequently than common knowledge.Coordination games; experimental philosophy; epistemic attitudes, weak-link game; conventions

Focal Points and Economic Efficiency: Role of Relative Label Salience

We experimentally analyze efficiency-enhancing power of focal points in 2x2 Pareto-ranked coordination games. We find that the power of focal labels, when attached to the Pareto-efficient strategy, to promote efficiency critically depends upon the alternative strategy’s label salience. When the relative salience of our focal labels is considerably weaker, focal labels mostly fail to raise expected efficiency beyond the mixed-strategy prediction. But when the relative salience of our focal labels is markedly stronger, focal labels raise expected efficiency much beyond the mixed-strategy prediction. Furthermore, we find that focal labels’ efficiency-enhancing power decreases as a measure of risk-dominance increases across games.

You Better Play 7: Mutual versus Common Knowledge of Advice in a Weak-link Experiment

This paper presents the results of an experiment on mutual versus common knowl- edge of advice in a two-player weak-link game with random matching. Our experimen- tal subjects play in pairs for thirteen rounds. After a brief learning phase common to all treatments, we vary the knowledge levels associated with external advice given in the form of a suggestion to pick the strategy supporting the payo-dominant equilib- rium. In the mutual knowledge of level 1 treatment, the suggestion appears on every subject's monitor at the beginning of every round, with no common knowledge that everybody sees the same suggestion. In the mutual knowledge of level 2 treatment, the same suggestion appears on each subject's monitor, accompanied by the request to "send" the suggestion to the partner in the round, followed by a notication that the message has been read. Finally, in the common knowledge treatment, the suggestion is read aloud by the experimenter at the end of the learning phase. Our results are somewhat surprising and can be summarized as follows: in all our treatments both the choice of the efficiency-inducing action and the percentage of e cient equilibrium play are higher with respect to the control treatment, revealing that even a condition as weak as mutual knowledge of level 1 is sufficient to signicantly increase the salience of the e cient equilibrium with respect to the absence of advice. Furthermore, and contrary to our hypothesis, mutual knowledge of level 2 (as the one occurring in our "message" treatment) induces successful coordination more frequently than common knowledge.Coordination games; experimental philosophy; epistemic attitudes, weak-link game; conventions

You better play 7: mutual versus common knowledge of advice in a weak-link experiment

This paper presents the results of an experiment on mutual versus common knowledge of advice in a two-player weak-link game with random matching. Our experimental subjects play in pairs for thirteen rounds. After a brief learning phase common to all treatments, we vary the knowledge levels associated with external advice given in the form of a suggestion to pick the strategy supporting the payoff- dominant equilibrium. Our results are somewhat surprising and can be summarized as follows: in all our treatments both the choice of the efficiency-inducing action and the percentage of efficient equilibrium play are higher with respect to the control treatment, revealing that even a condition as weak as mutual knowledge of level 1 is sufficient to significantly increase the salience of the efficient equilibrium with respect to the absence of advice. Furthermore, and contrary to our hypothesis, mutual knowledge of level 2 induces, under suitable conditions, successful coordination more frequently than common knowledge

An Experimental Investigation of Optimal Learning in Coordination Games

This paper presents an experimental investigation of optimal learning in repeated coordination games. We find evidence for such learning when we limit both the cognitive demands on players and the information available to them. We also find that uniqueness of the optimal strategy is no guarantee for it to be used. Optimal learning can be impeded by both irrelevant information and the complexity of the coordination task. ZUSAMMENFASSUNG - (Eine experimentelle Untersuchung des optimalen Lernens in Koordinationsspielen) In diesem Beitrag wird eine experimentelle Untersuchung des optimalen Lernens in wiederholten Koordinationsspielen vorgestellt. Derartiges Lernen wird beobachtet, wenn kognitive Anforderungen an die Spieler und die ihnen zur Verfügung stehende Information begrenzt sind. Es zeigt sich aber auch, daß die Einzigartigkeit der optimalen Strategie keine Garantie dafür ist, daß sie angewendet wird. Optimales Lernen kann sowohl durch irrelevante Informationen als auch durch die Komplexität der Koordinationsaufgabe behindert werden.

Timing and Virtual Observability in Ultimatum Bargaining and "Weak Link" Coordination Games

Previous studies have shown that simply knowing one player moves first can affect behavior in games, even when the first-mover's moves are known to be unobservable. This observation violates the game-theoretic principle that timing of unobserved moves is irrelevant, but is consistent with virtual observability, a theory of how timing can matter without the ability to observe actions. However, this previous research only shows that timing matters in games where knowledge that one player moved first can help select that player's preferred equilibrium, presenting an alternative explanation to virtual observability. We extend this work by varying timing of unobservable moves in ultimatum bargaining games and “weak link” coordination games. In the latter, the equilibrium selection explanation does not predict any change in behavior due to timing differences. We find that timing without observability affects behavior in both games, but not substantially