Are Imitative Strategies Game Specific? Experimental Evidence from Market Games

This paper studies imitation in price and quantity markets. We analyse the results of two experiments designed with different information settings. The analysis shows that information is used differently and has diverse effects according to the market under investigation.Cournot, Bertrand experiments, imitation

Individuals' Voting Choice and Cooperation in Repeated Social Dilemma Games

In this paper we explore the relationship between the individual’s preference for cooperation and the establishment of cooperative norms. Our aim is to provide an experimental test of the evolutionary hypothesis (see Carpenter, 2004, Fehr and Gachter 2002; Gintis 2000; Boyd, Bowles, Gintis and Richerson 2003; Bowles and Gintis 2004), according to which individuals are prepared to punish defectors in experimental social dilemma games because they want to enforce a social (“altruistic”) norm which may conduce to increasing their future payoffs, as in the case of sanctions against free riding behaviour. According to this line of research , the high levels of cooperation we observe in our societies can, therefore, be strictly related to the establishment of social norms which are able to enforce and maintain cooperation in the long run. We study the results of two experiments in which the individuals decided both whether to participate in a common project and the institutional rule according to which the profits of the project had to be shared among each of the participants in the group. They could choose between 1) a regime where gains were shared equally, regardless of individuals’ contributions and without sanctions and rewards (System A); 2) a regime where individuals were paid according to their marginal contribution, but the profits of the investments were lower than in the other contexts (System B); finally 3) a regime in which gains were shared equally (as in System A), but individuals were allowed to punish (and\or reward) free riding (cooperative) behaviours as in Sefton, Shupp and Walker (2007). Before the experiments took place, our subjects were required to fill a questionnaire composed of four sections, where their attitude to cooperate and their opinions on civic values and free riding behaviours were thoroughly explored. We then monitored the behaviour of potential free riders and cooperators in the game and their institutional choices. Our results partly contradict the evolutionary hypothesis in as much as System A and B received the largest shares of votes in almost all rounds and they were voted by free riders and cooperators alike. Thus, most individuals do not like sanctions (incentives) against defectors and free riders (cooperators), and their institutional preferences do not seem to be related to their willingness to cooperate. The inspection of individual data, however, reveals some interesting points. In fact, we can assert that System C was mostly chosen by cooperative individuals in response to observed free riding behaviour. Furthermore, when a cooperative individual chose C, she would tend to punish free riders and reward cooperators. Our conclusion is that, as far as the institutional choices are concerned, beside the profit motivations underlined in the evolutionary hypothesis, the ethical and cultural unobserved individual preferences play an important role. There is a number of individuals (limited in our experiments, ranging between 15 and 30 per cent of the entire population) who see cooperation as the “right” thing to do, and therefore are prepared to implement institutional rules that may favour this collective outcome. Most people in our experiments did not share these same values.public good games, experiments, voting choices

measures of social capital and trust

Trust and trustworthiness are important components of social capital and much attention has been devoted to the problems of their correct evaluation. Attitudinal survey questions as reported in the EVS – European Value Survey - are often regarded as inefficient indicators of trust, since they lack of behavioural underpinnings (Putnam, 1995) which one might desire when measuring trust. In this paper, we consider alternative measures of trust and trustworthiness, based on behavioural assumptions. We construct two relative behavioural measures of trust (RBM1 and RBM2), both based on the ex post measurement of trust, once individuals are informed on the level of trustworthiness of the social group to which they have been allocated during the experiment. Our main finding is that the relative behavioural measures show that trust strongly varies once the individual is informed on the on the level of trustworthiness of the social group to which he\she has been allocated during the experiment. This difference is higher the higher is the family level of income and the parental education status. As for previous findings (Glaeser et al., 2000, Lazzarini, 2005) which have found no correlation between attitudinal and behavioural measures of trust, we find that relative behavioural measures are not correlated to attitudinal measures but they are strongly correlated to groups’ trustworthiness. We also find that similar social preferences profiles (between Senders and Recipients) tend to enhance the individual level of trust, in the RBM2 context. This result seems to confirm the importance of the homogeneity of the social environment when studying the effects of policy interventions (Alesina and La Ferrara, 2002).social capital, trust, experiments

Social Influence in Trustors’ Neighborhoods

Economists have often analysed the impact that the spread of beliefs and behaviors have on the equilibrium and performance of markets. Recent experimental studies on peer pressure in groups of agents interacting in investment and gift exchange games (Mittone and Ploner, 2011, Gachter et al. 2010) have proved that the imitation of partners’ behaviors can have substantial effects on reciprocity, thus confirming that the effects of information also need to be studied in games where social preferences play a fundamental role. The aim of this paper is to ascertain whether trust is affected by contagion and herding in small groups of trustors who can observe each other’s choices over time. We account for three important factors of trustors’ preferences,namely: risk attitude, generosity and expected trustworthiness. Using our data we test the basic hypothesis that an individual's propensity to trust recipients in the Trust Game can be affected by the observed behavior of other trustors. Our results confirm that trust is affected by contagion effects. Furthermore, we find that specific types of agents (generous or untrusting) more often imitate the same type, when positioned in the same group. Finally, we find that untrusting individuals are less affected by their peers compared to generous individuals, and they imitate less even when positioned in groups of agents who have the same characteristics.trust game, experiments, social influence, imitation

Eliciting Motives for Trust and Reciprocity by Attitudinal and Behavioural Measures

Value Surveys may reveal well-behaved societies by the statistical treatment of the agents’ declarations of compliance with social values. Similarly, the results of experiments conducted on games with conflict of interest trace back to two important primitives of social capital – trust and reciprocity – which can be used to explain deviations from the Nash equilibrium and which lead to the optimal cooperative outcome. In this paper we attempt to elicit the true motive(s) underlying the behaviour of players in experimental trust and dictator games and suggest that the most informative utilization of surveys in this regard goes beyond the simple comparison of answers to a questionnaire with actual behaviour. Specifically the paper uses descriptive statistics and ordered probit models to analyse whether, and to what extent, answers to a questionnaire about attitudes to trusting and reciprocating predict subjects’ behaviour and, by comparing behaviour in Trust and Dictator Game, disentangles the strategic and altruistic motivations. We find no simple or direct correlation between behavioural trust or trustworthiness and attitudinal trust or disposition to reciprocate. However, dividing subjects according to attitudinal trust and trustworthiness, we observe that the link between the questionnaire and experimental sessions is more subtle than the mere correlation between average attitudes and average behaviours. The information conveyed by a survey appears to be much more powerful ex post – once the two motivational components have been separated out.trust, reciprocity, experimental economics, ordered probit

Social Learning in Market Games

The aim of our experiments is to test the effect of different information settings on firms’ behaviour in duopoly price and quantity games. We find that, when players have full information on their rivals’ choices, the imitation rule prevails and such learning behaviour induces more competitive outcomes in the Cournot market designs. By the same token, when information on the average industrial profit is provided, there is evidence of an increase in cooperation, and the majority of players experiment with new strategies when their payoff falls below the average profit (F. Palomino and F. Vega-Redondo, 1999; H. Dixon, 2000)Learning, Cournot and Bertrand experiments

Information and Learning in Bertrand and Cournot Experimental Duopolies

In this paper we report the results from a series of experiments on Cournot (homogeneous and differentiated products) and Bertrand (differentiated products) duopoly markets with no uncertainty, fixed endpoints and random matching. For each set, the experiments are designed with three alternative information set up: I) no information (participants are only informed on their own payoff for the period), 2) average industrial profit (participants are informed on their own performance, as well as on the average profit in all markets), 3) imitation (players are informed, on request, on their rivals’ past successful actions). The effect of different information structures on individual behaviour in market experiments is a long debated issue. Recently, using evolutionary arguments, it has been argued that the imitation of successful strategies induces more competitive equilibria in market games (M. Schaffer, 1989; F. Vega-Redondo 1997). By the same token, the information on the industry’s average profitability might induce more collusive outcomes, if such markets signals are perceived by players as aspiration levels and if they therefore try new strategies anytime their profits fall below such threshold (F. Palomino and F. Vega-Redondo, 1999; H. Dixon, 2000). Our aim is to test such predictions in duopoly price and quantity games. We find that the imitation learning rule prevails when players have full information on their rivals’ previous choices, and such learning behaviour induces more competitive outcomes in the Cournot market designs. As for the aspiration learning rule, the evidence is unclear. Whilst in the majority of the cases, players experiment new strategies when their payoff falls below the average profit, as predicted by the aspiration rule, we find no evidence of convergence to collusion, though in the Cournot experiments, the fraction of players choosing cooperative actions in the last stages of the game significantly increase in the second information setting.Cournot and Bertrand Experiments, learning J.E.L. Classification: C91, D83

Are Imitative Strategies Game Specific? Experimental Evidence from Market Games

This paper studies imitation in price and quantity markets. We analyse the results of two experiments designed with different information settings. The analysis shows that information is used differently and has diverse effects according to the market under investigation

Eliciting motives for trust and reciprocity by attitudinal and behavioural measures

Two important primitives of social capital are the disposition to trust and to reciprocate manifested in social life. In this paper, attitudinal and behavioural evidence is used to investigate the nature of the motivations underlying behaviour in Trust and Dictator games. In doing so, we have three aims. First, to find out whether, and to what extent, answers to a questionnaire about attitudes towards trust and civicness predict subjects' behaviour. Second, to disentangle strategic from other-regarding motivations by comparing behaviour in Trust and Dictator Games. Third, to investigate to what extent a correspondence could be found between subjects' attitudinal `type' and their behaviour in the two interactive experimental settings. The paper builds on previous work in the area and in particular finds that using surveys to distinguish between the behavioural responses of different attitudinal types _ ``Trusting'' or ``Prudent'' on the one hand and ``Trustworthy'' or ``Untrustworthy'' on the other, allows us to dig deeper into the underlying motivations of the experimental subjects. The self-declared trusting tend to manifest trust by investing more in the risky interaction than the prudent, and the self-declared trustworthy are inclined to return more than the untrustworthy. Moreover, the self-reported trustworthy and untrustworthy tend to manifest positive or negative reciprocity, respectively. The evidence suggests that the former are moved by the intention to reward and the latter by the desire to punish a stingy Sender by returning an even smaller amount than received. This seems to confirm the ``multiple self'' view (Elster, 1986), whereby in the personality of each individual many components - possibly distant in terms of the motivating sentiments - are gathered together

Second Mover Advantage and Bertrand Dynamic Competition: An Experiment

In this paper we provide an experimental test of a dynamic Bertrand duopolistic model, where firms move sequentially and their informational setting varies across different designs. Our experiment is composed of three treatments. In the first treatment, subjects receive information only on the costs and demand parameters and on the price’ choices of their opponent in the market in which they are positioned (matching is fixed); in the second and third treatments, subjects are also informed on the behaviour of players who are not directly operating in their market. Our aim is to study whether the individual behaviour and the process of equilibrium convergence are affected by the specific informational setting adopted. In all treatments we selected students who had previously studied market games and industrial organization, conjecturing that the specific participants’ expertise decreased the chances of imitation in treatment II and III. However, our results prove the opposite: the extra information provided in treatment II and III strongly affects the long run convergence to the market equilibrium. In fact, whilst in the first session, a high proportion of markets converge to the Nash-Bertrand symmetric solution, we observe that a high proportion of markets converge to more collusive outcomes in treatment II and more competitive outcomes in treatment III. By the same token, players’ profits significantly differ in three settings. An interesting point of our analysis relates to the assessment of the individual behavioural rules in the second and third treatments. When information on the behaviour of participants on uncorrelated markets is provided, players begin to adopt mixed behavioural rules, in the sense that they follow myopic best reply rules as long as their profits are in line with the average profits on all markets, and , when their gains fall below that threshold, they start imitating successful strategies adopted on other markets