Learning to Make Strategic Moves: Experimental Evidence

Abstract

Do players in practice make the strategic commitment moves that are predicted by game theory? Since such strategic moves can appear somewhat counter-intuitive, we conducted an experiment to see if people make the predicted strategic move. The experiment uses a simple bargaining situation. A player can make a strategic move of committing to not seeing what the other player will demand. Our data show that the subjects do, but only after substantial time, learn to make the predicted strategic move. We also find significant efficiency differences between our treatments that are not predicted by theory.Strategic moves; commitment; bargaining; information; strategic value of information; physical timing effects; virtual observability; endogenous timing; learning; experiment