Adaptation dynamics in individual and strategic behavior: an experimental analysis

1Dottorato di Ricerca in Economics (XXVII ciclo), LUISS Guido Carli, Roma, 2016. Relatori: Prof. Daniela Di Cagno e Prof. Giovanni Ponti.openWhen we look at the first rounds of an experiment, the large differences and variance among individual performances might be driven by a lack of experience and results tend to overestimate this heterogeneity. An experiment based on many rounds helps participants to adapt and improve decisions, both in strategic and non-strategic games; additionally, some individuals may be unaccustomed to a specific game and need some time to understand properly the task and their best (individual) strategy to apply. This dissertation focuses, in four chapters, on adaptation dynamics and experience in strategic games and individual decision games. In particular, the role of experience through time that helps agents to improve their performances in accordance with their preferences. Game repetition allows agents to fill the gap of experience in specific tasks, improving their performances and individual self-confidence. In this sense this dissertation aims to explore different experimental settings in which individuals, playing repeatedly the same task through the whole experiment, are able to become more sophisticated compared to early performances. Two chapters focus on strategic behavior in a bargaining problem, in particular we compare how participants change their behavior through time. A third chapter focuses on the individual adaptation dynamics in a Hybrid Public Good game, in particular the motivation of participants when contributing to a public good in the role of "leader" or "follower". In this work we distinguish between conditional cooperators and exploiters, which adapt differently to the game. The last chapter, looks at individual decisions and experience effect in gambling games. We focus on a well-known cognitive bias, the almost- winning bias; agents misrepresenting the game are unable to distinguish between situations in which near misses signal ability and those in which no ability is involved.openDottorato di Ricerca in EconomicsGALLIERA, ARIANNAGalliera, Ariann

To Switch or Not to Switch Payment Scheme? Determinants and Effects in a Bargaining Game

The incentive scheme selected in a laboratory experiment might trigger different type of behavior in participants. This paper is an attempt to screen the strategies adopted by agents in a bargaining game when buyer and seller have partly conflicting interests and are asymmetrically informed. We allow participants to choose the incentive scheme through which they will be paid at the end of the experiment controlling for past experience and individual characteristics. It is well known that payment method is highly correlated to the risk preferences shown by individuals, but little research is devoted to the analysis of the behavior induced by Random Lottery Incentive scheme (RLI for short) and Cumulative Scheme payment (CS for short) both on individual and social results. This paper aims to fill the gap

Gender Differences in Yielding to Social Influence : An Impunity Experiment

In impunity games proposers, like allocators in dictator games, can take what they want; however, responders can refuse offers deemed unsatisfactory at own cost. We modify the impunity game via allowing offers to condition of another participant’s counterfactual generosity intention. For a given pair of proposer candidates each states, via the strategy vector method, an intended and two adjusted offers: one (possibly) upward adjusted in case the intended offer of the other candidate is higher and one (possibly) downward adjusted in case it is lower. Additionally, each candidate determines an acceptance threshold for the responder role. Only one candidate in each pair is randomly selected and endowed as the actual proposer whose offer is either possibly upward or downward adjusted depending on the counterfactual offer of the other proposer candidate. The endowed proposer of one pair is matched with the non-endowed candidate of another pair in the responder role. The data confirm that counterfactual intentions of others often affect own generosity via substantial and significant average adjustments to the weakest social influence. Overall, offers seem correlated with acceptance thresholds. Furthermore, we find significant gender differences: female participants state lower intended and adjusted offers as well as acceptance thresholds and therefore appear to be less sensitive to social influence

Gender differences in yielding to social influence: An impunity experiment

In impunity games proposers, like allocators in dictator games, can take what they want; however, responders can refuse offers deemed unsatisfactory at own cost. We modify the impunity game via allowing offers to condition of another participant\u2019s counterfactual generosity intention. For a given pair of proposer candidates each states, via the strategy vector method, an intended and two adjusted offers: one (possibly) upward adjusted in case the intended offer of the other candidate is higher and one (possibly) downward adjusted in case it is lower. Additionally, each candidate determines an acceptance threshold for the responder role. Only one candidate in each pair is randomly selected and endowed as the actual proposer whose offer is either possibly upward or downward adjusted depending on the counterfactual offer of the other proposer candidate. The endowed proposer of one pair is matched with the non-endowed candidate of another pair in the responder role. The data confirm that counterfactual intentions of others often affect own generosity via substantial and significant average adjustments to the weakest social influence. Overall, offers seem correlated with acceptance thresholds. Furthermore, we find significant gender differences: female participants state lower intended and adjusted offers as well as acceptance thresholds and therefore appear to be less sensitive to social influence

Experience and Gender Effects in an Acquiring-a Company Experiment Allowing for Value Messages

This paper focuses on a bargaining experiment in which the privately informed seller of a company sends a value message to the uninformed potential buyer who then proposes a price for acquiring the company. Participants are constantly in the role of either seller or buyer and interact over 30 rounds with randomly changing partners in the other role. We test how overstating the value of the company, underpricing the received value message and acceptance of price offers are affected by experience and gender (constellation). Like in our companion paper on single play (Di Cagno et al. 2015) we control via treatments for awareness of gender (constellation). One main hypothesis is that gender (constellation) matters but that the effects become weaker with more experience and that the main experience effects apply across gender (constellations)

Behavioral Patterns and Reduction of Sub-Optimality: An Experimental Choice Analysis

This paper attempts to identify behavioral patterns and compare their average success considering several criteria of bounded rationality. Experimentally observed choice behavior in various decision tasks is used to assess heterogeneity in how individual participants respond to 15 randomly ordered portfolio choices, each of which is experienced twice. Treatments differ in (not) granting probability information and in (not) eliciting aspirations. Since in our setting neither other regarding concerns nor risk attitude matter and probability of the binary chance move is (optimal) choice-irrelevant, categorizing decision types relies on parameter dependence and choice adaptations. We find that most participants reduce systematically sub-optimality when following the identified criteria

(Sub) Optimality and (non) optimal satisficing in risky decision experiments

We implement a risky choice experiment based on one-dimensional choice variables and risk neutrality induced via binary lottery incentives. Each participant confronts many parameter constellations with varying optimal payoffs. We assess (sub)optimality, as well as (non) optimal satisficing by eliciting aspirations in addition to choices. Treatments differ in the probability that a binary random event, which are payoff-but not optimal choice-relevant is experimentally induced and whether participants choose portfolios directly or via satisficing, i.e., by forming aspirations and checking for satisficing before making their choice. By incentivizing aspiration formation, we can test satisficing, and in cases of satisficing, determine whether it is optimal

Self-Selecting Random or Cumulative Pay? A Bargaining Experiment

An incentive scheme in a multi-task experiment may trigger different types of behavior in participants. This experimental study allows participants to decide between being paid to complete a random task or being paid an average across all tasks completed in a bargaining game where the buyer and seller have partly conflicting interests and are asymmetrically informed. We find that both past experience and individual characteristics have a significant effect on the payment scheme selected and the final trading result. Although the payment method is likely to be correlated with risk preferences, it may also be influenced by ego-defensive concerns. Analysis of the self-selected Random Lottery Incentives scheme (RLI) and the Cumulative Scheme (CS) shows both individual and social effects: sellers who prefer CS over RLI receive a larger share of the surplus, and (female) buyers choosing RLI play with a lower degree of trust with the aim of closing better deals

Self-Selecting Random or Cumulative Pay? A Bargaining Experiment

An incentive scheme in a multi-task experiment may trigger different types of behavior in participants. This experimental study allows participants to decide between being paid to complete a random task or being paid an average across all tasks completed in a bargaining game where the buyer and seller have partly conflicting interests and are asymmetrically informed. We find that both past experience and individual characteristics have a significant effect on the payment scheme selected and the final trading result. Although the payment method is likely to be correlated with risk preferences, it may also be influenced by ego-defensive concerns. Analysis of the self-selected Random Lottery Incentives scheme (RLI) and the Cumulative Scheme (CS) shows both individual and social effects: sellers who prefer CS over RLI receive a larger share of the surplus, and (female) buyers choosing RLI play with a lower degree of trust with the aim of closing better deals