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Full-Text Articles in Other Economics
People Do Not Discount Heavily In Strategic Settings, But They Believe Others Do, Cary Deck, Salar Jahedi
People Do Not Discount Heavily In Strategic Settings, But They Believe Others Do, Cary Deck, Salar Jahedi
ESI Working Papers
Several studies have shown that people greatly discount future bene ts and costs. However, most of the direct laboratory evidence of this phenomenon has focused on individual choice experiments. This paper investigates the degree to which the timing of payments a ects behavior in four commonly studies strategic settings: a Prisoner's Dilemma game, a Stag-Hunt game, a First Price Auction and a Second Price Auction. In all four settings, a two week delay in payo s has a comparable e ect to a 20% reduc- tion in current payo s. A follow-up study suggests that it is an individual's strategic …
Single- And Double-Elimination All-Pay Tournaments, Cary Deck, Erik O. Kimbrough
Single- And Double-Elimination All-Pay Tournaments, Cary Deck, Erik O. Kimbrough
ESI Working Papers
Tournaments consisting of iterative matches are a common mechanism for determining how to allocate a prize. While participants are focused on their own outcomes, tournament organizers often have objectives such as maximizing the total investment or effort by the participants over the course of the tournament. For this reason it is important for organizers to understand the behavioral as well as the theoretical properties of different tournament structures. Given that laboratory experiments have consistently found high levels of overbidding in contests, one might suspect that double-elimination tournaments would generate substantially more total investment than single-elimination tournaments despite the two types …
When Parity Promotes Peace: Resolving Conflict Between Asymmetric Agents, Erik O. Kimbrough, Roman M. Sheremeta, Timothy W. Shields
When Parity Promotes Peace: Resolving Conflict Between Asymmetric Agents, Erik O. Kimbrough, Roman M. Sheremeta, Timothy W. Shields
ESI Working Papers
Due to the high costs of conflict both in theory and practice, we examine and experimentally test the conditions under which conflict between asymmetric agents can be resolved. We model conflict as a two-agent rent-seeking contest for an indivisible prize. Before conflict arises, both agents may agree to allocate the prize by fair coin flip to avoid the costs of conflict. The model predicts that “parity promotes peace”: in the pure-strategy equilibrium, agents with relatively symmetric conflict capabilities agree to resolve the conflict by using a random device; however, with sufficiently asymmetric capabilities, conflicts are unavoidable because the stronger agent …
Commitment Problems In Conflict Resolution, Erik O. Kimbrough, Jared Rubin, Roman M. Sheremeta, Timothy W. Shields
Commitment Problems In Conflict Resolution, Erik O. Kimbrough, Jared Rubin, Roman M. Sheremeta, Timothy W. Shields
ESI Working Papers
Commitment problems are inherent to non-binding conflict resolution mechanisms, since an unsatisfied party can ignore the resolution and initiate conflict. We provide experimental evidence suggesting that even in the absence of binding contractual agreements individuals often avoid conflict by committing to the outcome of a conflict resolution mechanism. Commitment problems are mitigated to a greater extent for groups who opt-in to the conflict resolution mechanism, but only when opting-in is costly. Although conflict rates are higher when opting-in is costly than when it is free or exogenously imposed, commitment problems are greatly reduced amongst those groups who choose to opt-in.
Building And Rebuilding Trust With Promises And Apologies, Eric Schniter, Roman M. Sheremeta, Daniel Sznycer
Building And Rebuilding Trust With Promises And Apologies, Eric Schniter, Roman M. Sheremeta, Daniel Sznycer
ESI Working Papers
Using trust games, we study how promises and messages are used to build new trust where it did not previously exist and to rebuild damaged trust. In these games, trustees made non-binding promises of investment-contingent returns, then investors decided whether to invest, and finally trustees decided how much to return. After an unexpected second game was announced, but before it commenced, trustees could send a one-way message. This design allowed us to observe the endogenous emergence and natural distribution of trust-relevant behaviors and focus on naturally occurring remedial strategies used by promise-breakers and distrusted trustees, their effects on investors, and …
Transparency, Efficiency And The Distribution Of Economic Welfare In Pass-Through Investment Trust Games, Thomas A. Rietz, Roman M. Sheremeta, Timothy W. Shields, Vernon Smith
Transparency, Efficiency And The Distribution Of Economic Welfare In Pass-Through Investment Trust Games, Thomas A. Rietz, Roman M. Sheremeta, Timothy W. Shields, Vernon Smith
ESI Working Papers
We design an experiment to examine welfare and behavior in a multi-level trust game representing a pass through investment in an intermediated market. In a repeated game, an Investor invests via an Intermediary who lends to a Borrower. A pre-experiment one-shot version of the game serves as a baseline and to type each subject. We alter the transparency of exchanges between non-adjacent parties. We find transparency of the exchanges between the investor and intermediary does not significantly affect welfare. However, transparency regarding exchanges between the intermediary and borrower promotes trust on the part of the investor, increasing welfare. Further, this …
Fight Or Flight? Defending Against Sequential Attacks In The Game Of Siege, Cary Deck, Roman M. Sheremeta
Fight Or Flight? Defending Against Sequential Attacks In The Game Of Siege, Cary Deck, Roman M. Sheremeta
ESI Working Papers
This paper examines theory and behavior in a two-player game of siege, sequential attack and defense. The attacker’s objective is to successfully win at least one battle while the defender’s objective is to win every battle. Theoretically, the defender either folds immediately or, if his valuation is sufficiently high and the number of battles is sufficiently small, then he has a constant incentive to fight in each battle. Attackers respond to defense with diminishing assaults over time. Consistent with theoretical predictions, our experimental results indicate that the probability of successful defense increases in the defenders valuation and it decreases in …
Price Increasing Competition? Experimental Evidence, Cary Deck, Jingping Gu
Price Increasing Competition? Experimental Evidence, Cary Deck, Jingping Gu
ESI Working Papers
Economic intuition suggests that increased competition generates lower prices. However, recent theoretical work shows that a monopolist may charge a lower price than a firm facing a competitor selling a differentiated product. The direction of the price change when competition is introduced is dependent upon the joint distribution of buyer values for the two products. We explore this relationship using controlled laboratory experiments. Our results indicate that the distribution of buyer values does affect prices in a manner consistent with the theoretical predictions, although price increasing competition is rare due in part to overly intense competition regardless of the distribution …
The Attack And Defense Of Weakest-Link Networks, Dan Kovenock, Brian Roberson, Roman M. Sheremeta
The Attack And Defense Of Weakest-Link Networks, Dan Kovenock, Brian Roberson, Roman M. Sheremeta
ESI Working Papers
This paper experimentally examines behavior in a two-player game of attack and defense of a weakest-link network of targets, in which the attacker‟s objective is to successfully attack at least one target and the defender‟s objective is diametrically opposed. We apply two benchmark contest success functions (CSFs): the auction CSF and the lottery CSF. Consistent with the theoretical prediction, under the auction CSF, attackers utilize a stochastic “guerilla warfare” strategy — in which a single random target is attacked — more than 80% of the time. Under the lottery CSF, attackers utilize the stochastic guerilla warfare strategy almost 45% of …