The gradual decline of cooperation: Endgame effects in evolutionary game theory

The article provides an evolutionary analysis of a finitely iterated Prisoner's Dilemma. The backward induction reasoning for a breakdown of cooperation in this game is transformed to an evolutionary degradation effect. After the introduction of random variations in the strategies' population size, however, cyclical variations of cooperativeness may appear. A breakdown of cooperation is no longer inevitable. An analysis for all possible payoff relations in Prisoner's Dilemma matrices shows that only four qualitatively different dynamical flows can emerge.     

An experimental study of the generosity game

We study ultimatum and dictator variants of the generosity game. In this game, the first mover chooses the amount of money to be distributed between the players within a given interval, knowing that her own share is fixed. Thus, the first mover is not confronted with the typical trade-off between her own and the other’s payoff. For each variant of the game, we study three treatments that vary the range of potential pie sizes so as to assess the influence of these changes on the first movers’ generosity. We find that removing the trade-off inspires significant generosity, which is not always affected by the second mover’s veto power. Moreover, the manipulation of the choice set indicates that choices are influenced by the available alternatives.     

Min- and Max-induced rankings: an experimental study

The current paper is the first to report an experimental study of “Min- and Max-induced rankings” (MMIR), i.e., a family of set rankings that require preferences over sets to be induced from comparison of the best and/or worst elements within those sets. These MMIR do not perform well in predicting preferences over simple sets of monetary outcomes. In this paper, we investigate the axiomatic underpinnings of these models by means of pairwise choice experiments. From this investigation, some important conclusions can be drawn: Axioms that prevent rankings to be based on total-goodness, as well as monotonicity conditions (ensuring that replacing a set element with a better one results in a better set) cannot be refuted. Axioms that rule out any utilization of the relative difference in the values of the outcomes and axioms that prevent rankings to be based on average-goodness are all systematically violated. The Uniform Expected Utility (UEU) criterion seems to meet the apparent shortcomings of the MMIR. Some frequently occurring preference patterns, however, suggest that a significant portion of the participants uses neither a Min- or Max-induced ranking, nor UEU, but some other unspecified decision rule, possibly characterized by the tendency to prefer a diversification of uncertainty.     

Strategic ambiguity and decision-making: an experimental study

We conducted a set of experiments to compare the effect of ambiguity in single-person decisions and games. Our results suggest that ambiguity has a bigger impact in games than in ball and urn problems. We find that ambiguity has the opposite effect in games of strategic substitutes and complements. This confirms a theoretical prediction made by Eichberger and Kelsey (J Econ Theory 106:436–466, 2002). In addition, we note that subjects’ ambiguity attitudes appear to be context dependent: ambiguity loving in single-person decisions and ambiguity averse in games. This is consistent with the findings of Kelsey and le Roux (Theory Decis 79:667–688, 2015).     

Belief formation in a signaling game without common prior: an experiment

Using belief elicitation, the paper investigates the process of belief formation and evolution in a signaling game in which a common prior is not induced. Both prior and posterior beliefs of Receivers about Senders’ types are elicited, as well as beliefs of Senders about Receivers’ strategies. In the experiment, subjects often start with diffuse uniform beliefs and update them in view of observations. However, the speed of updating is influenced by the strength of initial beliefs. An interesting result is that beliefs about the prior distribution of types are updated slower than posterior beliefs, which incorporate Senders’ strategies. In the medium run, for some specifications of game parameters, this leads to outcomes being significantly different from the outcomes of the game in which a common prior is induced. It is also shown that elicitation of beliefs does not considerably change the pattern of play in this game.     

Entitlement and the efficiency-equality trade-off: an experimental study

When randomly assigning participants to experimental roles and the according payment prospects, participants seem to receive “manna from heaven.” In our view, this seriously questions the validity of laboratory findings. We depart from this by auctioning off player roles via the incentive compatible random price mechanism thus avoiding the selection effect of competitive second price auctions. Our experiment employs the generosity game where the proposer chooses the size of the pie, facing an exogenously given own agreement payoff, and the responder is the residual claimant. We find that entitlement crowds out equality seeking and strengthens efficiency seeking. More generally, we find that inducing entitlement for the roles in which participants find themselves makes a difference. Interpreting participants’ willingness to pay for their role as their aspiration level further allows to test satisficing and explore “mutual satisficing.” We find that responder participants apparently do not anticipate proposer generosity in aspiration formation.     

Multidimensional social identity and redistributive preferences: an experimental study

Theory and Decision - Social identity is embedded in social structures, generated by various social processes, and has multiple dimensions. We report findings from a laboratory experiment eliciting...     

Information transparency and equilibrium selection in coordination games: an experimental study

We experimentally investigate the role of information transparency for equilibrium selection in stag hunt coordination games. These games can be transformed from a prisoner’s dilemma game by introducing a centralized reward or punishment scheme. We aim to explore the impact of the disclosure of information on how final payoffs are derived on players’ incentive to coordinate on the payoff-dominant equilibrium. We find that such information disclosure significantly increases the tendency of players to play the payoff-dominant strategy and reduces the occurrence of coordination failure. The mechanism works directly through the positive impact of disclosure on the saliency of the payoff-dominant equilibrium, and indirectly through the positive influence of disclosure on players’ belief about the likelihood of cooperation by the opponent.     

The epistemic structure of a theory of a game

This paper is a contribution to the systematic study of alternative axiom-sets for theories of (normal-form, complete-information) games. It provides an introduction to epistemic logic, describes a formulation in epistemic logic of the structure of a theory of a game (the broad theory of that game), and applies methods of epistemic logic to define strategies for dealing with two disturbing features of game theory, its hyperrationality assumptions and its indeterminacy. The analysis of these problems is conducted in terms of two principles which impregnate much game theory, Cleverness and Cloisteredness (the principles that players know respectively all, and only, the logical consequences of their assumed knowledge). Broad theories allow us to formulate and revise these principles despite their metatheoretical character. It is shown how Cleverness may be weakened by using logics which restrict the Rule of Epistemization, and Cloisteredness by using default logic or autoepistemic logic; the latter is used to characterize Nash equilibrium beliefs as parts of certain autoepistemic extensions of players' knowledge bases, but these particular extensions are rejected as ungrounded.I am grateful for most helpful comments to Robin Cubitt, Joe Halpern, Ernest Geffner, Philippe Mongin, David Squires, Elias Thijsse and Tim Williamson.     

Learning strategic environments: an experimental study of strategy formation and transfer

I present an experiment on learning about a game in an initially unknown environment. Subjects play repeatedly simple 2 × 2 normal-form coordination games. I compare behavioral learning algorithms for different feedback information. Minimal feedback only informs about own payoffs, while additional feedback informs about own payoffs and the opponent’s choice. Results show that minimal feedback information leads to a myopic learning algorithm, while additional feedback induces non-myopic learning and increases the impulse with which players respond to payoff differences. Finally, there is evidence for a strategy transfer across games which differ only according to the relabel of actions, but not according to permutation in the payoff matrix.     

Moral judgments,gender, and antisocial preferences: an experimental study

We study questionnaire responses to situations in which sacrificing one life may save many other lives. We demonstrate gender differences in moral judgments: males are more supportive of the sacrifice than females. We investigate a source of the endorsement of the sacrifice: antisocial preferences. First, we measure individual proneness to spiteful behavior, using an experimental game with monetary stakes. We demonstrate that spitefulness can be sizable—a fifth of our participants behave spitefully—but it is not associated with gender. Second, we find that gender is consistently associated with responses even when we account for individual differences in the propensity to spitefulness.     

The joy of ruling: an experimental investigation on collective giving

We analyse team dictator games with different voting mechanisms in the laboratory. Individuals vote to select a donation for all group members. Standard Bayesian analysis makes the same prediction for all three mechanisms: participants should cast the same vote regardless of the voting mechanism used to determine the common donation level. Our experimental results show that subjects fail to choose the same vote. We show that their behaviour is consistent with a joy of ruling: individuals get an extra utility when they determine the voting outcome.     

Varying the number of bidders in the first-price sealed-bid auction: experimental evidence for the one-shot game

The paper reports experimental data on the behavior in the first-price sealed-bid auction for a varying number of bidders when values and bids are private information. This feedback-free design is proposed for the experimental test of the one-shot game situation. We consider both within-subjects and between-subjects variations. In line with the qualitative risk neutral Nash equilibrium prediction, the data show that bids increase in the number of bidders. However, in auctions involving a small number of bidders, average bids are above, and in auctions involving a larger number of bidders, average bids are below the risk neutral equilibrium prediction. The quartile analysis reveals that bidding behavior is not constant across the full value range for a given number of bidders. On the high value quartiles, however, the average bid–value ratio is not different from the risk neutral prediction. The behavior is different when the winning bid is revealed after each repetition.     

Prospect theory and tax evasion: a reconsideration of the Yitzhaki puzzle

The standard expected utility (EUT) model of tax evasion predicts that evasion is decreasing in the marginal tax rate (the Yitzhaki puzzle). Recent literature shows cases in which incorporating prospect theory (PT) does and does not overturn the Puzzle. In a general environment that nests both PT and EUT preferences, we provide a detailed study of how the elements of PT affect the Puzzle. PT does not always reverse the Puzzle, hence we give and interpret conditions for when it does and does not. When allowing for stigma and/or variable audit probability, PT reverses the Puzzle in the same way and with the same limitations as does EUT, if equally augmented.     

Buck-passing dumping in a garbage-dumping game

Theory and Decision - We study stable strategy profiles in a pure exchange game of bads, where each player dumps his or her bads such as garbage onto someone else. Hirai et al. (Mathematical Social...     

Risk aversion in bargaining: An experimental study

This paper reports the results of three experiments designed to test the predictions of the principal game-theoretic models of bargaining concerning the influence of risk aversion on bargaining outcomes. These models predict that risk aversion will be disadvantageous in bargaining except in situations in which potential agreements are lotteries with a positive probability of being worse than disagreement. The experimental results support the models' predictions. However, in the range of payoffs studied here, the effects due to risk aversion may be smaller than some of the focal point effects observed in previous experiments. Implications for further theoretical and experimental work are considered.     

Empathy and socially responsible consumption: an experiment with the vote-with-the-wallet game

Theory and Decision - We study by means of a laboratory experiment the role of individuals’ empathy in the Vote-with-the-Wallet Game. Our main purpose is to analyze the impact of the ability...     

The impact of governmental assistance on insurance demand under ambiguity: a theoretical model and an experimental test

This article deals with the impact of governmental assistance on insurance demand under ambiguity, i.e., in situations where probabilities are uncertain. First, using a model of insurance demand under ambiguity, we derive theoretical predictions about the impact of several governmental assistance programmes on optimal insurance demand. For example, governmental assistance through a fixed public support scheme implies that partial insurance is always optimal under fair insurance with ambiguity. Second, we present the results of an experiment designed to test these predictions. We find support for several of our theoretical predictions. For example, the presence of governmental assistance through a fixed public support scheme decreases individuals’ willingness to pay to be fully insured. Finally, we compare these results with those obtained for a risk situation. We find that, regardless of the form of governmental assistance, participants in the ambiguity context are consistently willing to pay more to be fully insured than participants in the risk situation.