Persistence of power: Repeated multilateral bargaining with endogenous agenda setting authority

We extend a simple repeated, multilateral bargaining model to allow successful agenda setters to hold on to power as long as they maintain the support of a majority of other committee members. Theoretically and experimentally, we compare this Endogenous Power environment with a standard Random Power environment in which agenda setters are appointed randomly each period. Although the theoretical analysis predicts that the two environments are outcome equivalent, the experimental analysis shows substantial differences in behavior and outcomes across the games. The Endogenous Power environment results in the formation of more stable coalitions, less-equitable budget allocations, the persistence of power across periods, and higher long-run inequality than the Random Power environment. We present evidence that the stationary equilibrium refinements traditionally used in the literature fail to predict behavior in either game

Flip-Flopping, Primary Visibility, and the Selection of Candidates

We present an incomplete information model of two-stage elections in which candidates can choose different platforms in primaries and general elections. Voters do not directly observe the chosen platforms, but infer the candidates’ ideologies from observing candidates’ campaigns. The ability of voters to detect candidates’ types depends on the visibility of the race. This model captures two patterns: the post-primary moderation effect, in which candidates pander to the party base during the primary and shift to the center in the general election; and the divisive-primary effect, which refers to the detrimental effect of hard-fought primaries on a party's general-election prospects

Ignorance is Bliss: An Experimental Study of the Use of Ambiguity and Vagueness in the Coordination Games with Asymmetric Payoffs

We consider a game where one player, the Announcer, has to communicate the value of a payoff relevant state of the world to a set of players who play a coordination game with multiple equilibria. While the Announcer and the players agree that coordination is desirable, since the payoffs of the players at the equilibria are unequal, they disagree as to which equilibrium is best. We demonstrate experimentally that in such coordination games, in order to mask the asymmetry of equilibrium payoffs, it may be advantageous for a utilitarian benevolent Announcer to communicate in an ambiguous or vague manner

Collusion through Communication in Auctions

We study the extent to which communication can serve as a collusion device in one-shot first- and second-price sealed-bid auctions. Theoretically, second-price auctions are more fragile to collusion through communication than first-price auctions. In an array of laboratory experiments we vary the amount of interactions (communication and/or transfers without commitment) available to bidders. We find that the auctioneer's revenues decrease significantly when bidders can communicate. When, in addition, bidders can make transfer promises, revenues decline substantially, with 70% of our experimental auctions culminating in the object being sold for approximately the minimal price. Furthermore, the effects of communication and transfers are similar across auction formats

Language and government coordination: An experimental study of communication in the announcement game

One of the key roles of government is to coordinate the activities of citizens. One reason why governments are efficient facilitators of coordinated action, in addition to their ability to force compliance or tax, is that they are typically endowed with more information than the individuals they govern. This advantage creates a dilemma for them, however, since it forces them to decide on how they should distribute the information in their possession to the population. This paper investigates this question. We investigate the “Announcement Game” defined by the government and those it governs and focus on communication strategy that government uses to communicate private information to the citizens. This communication strategy involves (1) partitioning the state space in an attempt to mask the true state of the world and (2) choosing what type of language to use in order to communicate elements of this partition. We present evidence that the language used to execute a communication strategy does affect the efficiency of the equilibrium convergence process and also demonstrate that subjects playing the role of the government exhibit a great deal of sophistication in the communication strategies they employ and the language they use to execute them

Collusion through communication in auctions

We study the extent to which communication can serve as a collusion device in one-shot first- and second-price sealed-bid auctions. In an array of laboratory experiments we vary the amount of interactions (communication and/or transfers without commitment) available to bidders. We find that communication alone leads to statistically significant but limited price drops. When, in addition, bidders can exchange transfers, revenues decline substantially, with over 70% of our experimental auctions culminating in the object being sold for approximately the minimal price. Furthermore, the effects of communication and transfers are similar across auction formats. We contrast these results with those generated in repeated auctions. By and large, repeated auctions yield lower collusion and lower efficiency levels

Stochastic Choice and Preferences for Randomization

We conduct an experiment in which subjects face the same questions repeated multiple times, with repetitions of two types: (1) following the literature, the repetitions are distant from each other; (2) in a novel treatment, the repetitions are in a row, and subjects are told that the questions will be repeated. We find that a large majority of subjects exhibit stochastic choice in both cases. We discuss the implications for models of stochastic choice