Simultaneous Evolution of Learning Rules and Strategies

We study a model of local evolution. Players are located on a network and play games agains their neighbors. Players are characterized by three properties: (1) The stage game strategies they use agains their neighbors. (2) The repeated game strategy that determines the former. (3) A learning rule that selects the repeated game strategy, on the basis of the player's own and the neighbors' payoff and repeated game strategy. The dynamics that specifies learning rules is given exogenously. Players sample their neighbors' learning rules and their respective payoff. Then they construct a model that related parameters of the learning rules to payoffs. Given this model they choose an optimal learning rule. We find that under this dynamics learning rules emerge in the long run which behave deterministically but which are asymmetric in the sense that while learning they put more weight on the learning players experience then on the observed players one. Nevertheless stage game behavior under these learning rules is similar to behavior using symmetric learning rules.Evolutionary Game Theory, Networks.

No imitation - on local and group interaction, learning and reciprocity in prisoners\

This study disentangles experimentally imitation, reinforcement, and reciprocity in repeated prisoners' dilemmas. We compare a simple situation in which players interact only with their neighbours (local interaction) with one where players interact with all members of the population (group interaction). We observe choices under different information conditions and estimate parameters of a learning model. We find that imitation, while assumed to be a driving force in many models of spatial evolution, is often a negligible factor in the experiment. Behaviour is predominantly driven by reinforcement learning.Local interaction,experiments,prisoner's dilemma,learning,reinforcement,repeated games

Will You Accept Without Knowing What? A Thuringian Newspaper Experiment of the Yes-No Game

Many economic experiments are run in the laboratory with students as participants. In this paper we use a newspaper experiment to learn more about external validity of lab research. Our workhorse is the Yes-No game. Unlike in ultimatum games responders of the Yes-No games do not know the proposal when deciding between whether to accept it or not. We use two different amounts that can be shared (100 Euro and 1000 Euro). In line with findings for the ultimatum game, offers were fairer and rejections less likely when participants are older and submit their decisisons via mail rather than the Internet. By comparing our results with other studies (using executives or students), we demonstrate, at least for this type of game, the external validity of lab research.

Why are stabilisations delayed : an experiment with an application to all pay auctions

We study with the help of experiments a two-player second-price all-pay auction. Such an auction describes e.g. the situation of a country were stabilisations are achieved through tax increases that eliminate a budget deficit. If these tax increases have distributional implications then stabilisation may be delayed (Alesina and Drazen, 1991). We find (1) under-dissipation and not over-dissipation of rents which is in contrast to other all-pay auction experiments. (2) Underdissipation decreases with increasing cost of distortionary taxation and increases with bidding cost. (3) Bidding is closer to the equilibrium on the individual than on the aggregate level. (4) The speed of stabilisations is smaller than the risk neutral Bayesian equilibrium and reacts less sensitively to changes in the cost of distortionary taxation

Simultaneous evolution of learning rules and strategies

We study a model of local evolution. Agents are located on a network and interact strategically with their neighbours. Strategies are chosen with the help of learning rules that are based on the success of strategies observed in the neighbourhood. The standard literature on local evolution assumes learning rules to be exogenous and fixed. In this paper we consider a specific evolutionary dynamics that determines learning rules endogenously. We find with the help of simulations that in the long run learning rules behave rather deterministically but are asymmetric in the sense that while learning they put more weight on the learning players' experience than on the observed players' one. Nevertheless stage game behaviour under these learning rules is similar to behaviour with symmetric learning rules

A pure variation of risk in private-value auctions

We introduce a new method of varying risk that bidders face in first-price and second-price private value auctions. We find that decreasing bidders’ risk in first-price auction reduces the degree of overbidding relative to the risk-neutral Bayesian Nash equilibrium prediction.This finding is consistent with the risk-aversion explanation of overbidding. Furthermore, we apply the method to second-price auctions and find that bidding behavior is robust to manipulating bidders'' risk as generally expected in auction theory.microeconomics ;

Expectations and perceived causality in fiscal policy: an experimental analysis using real world data

We generate observable expectations about fiscal variables through laboratory experiments using real world data from several European countries as stimuli.We estimate an econometric model of individual expectations for fiscal policy, which nests various theories of expectations-forming and encompasses both micro- and macro- economic lines of research on fiscal policy. Agents' expectations are found neither to be consistent with rational nor with purely adaptive expectations. Expectations follow an augmented-adaptive scheme, which embodies the "spend and tax hypothesis" on the relationship between taxes and expenditure to a greater extent than in real world data. We relate this findings to current research on the effects of fiscal policy. Methodological implications of the present approach for experiments in macroeconomics are also discussed.Experiments, fiscal policy, expectations, causality, cointegration, panel data

Social Welfare versus Inequality Concerns in an Incomplete Contract Experiment

We study a situation where two players first choose a sharing rule, then invest into a joint production process, and then split joint benefits. We investigate how social preferences determine investments. In our experiment we find that even the materially disadvantaged player cares more for social welfare than about inequality. Behavioral preferences of disadvantaged players actually increase inequality. We also investigate when players give up an advantageous sharing rule. Power-sharing can be successful in the experiment, even when it is not in a selfish world.experiments, incomplete contracts, relationship-specific investment, allocation of power, social preferences