4- In Search of Homo Economicus Flashcards
Which paper makes a statement about backward induction? What does it say?
What happens after backwards induction is introduced?
What can be said about subjects’ ability to look ahead?
Johnson et al. (2002)
provides evidence that backward induction is simply unnatural
offers came closer to equilibrium
most subjects concentrated on the current round when making decisions and looked ahead insufficiently
In Ho et al. (1998):
how does group size influence the closeness of choices to equilibrium?
how do results change when games consist of experienced vs inexperienced players?
Choices closer to equilibrium for large (N=7) groups rather than small (N=3) groups
No real difference in results for experienced vs. inexperienced players - but convergence is quicker
Which economic game was introduced in Güth et al. (1982)?
Ultimatum game
Briefly describe the offers observed in Güth et al. (1982)
Most offers tend to be around 40% of the pie
low offers (i.e. less than 20%) are often rejected
Which topic are you studying?
In Search of Homo Economicus
Which paper compares behavior in BCGs with n=2 and n=18 using both students and academics?
What is a special feature of the 2 person BCG?
Grosskopf and Nagel (2008)
special feature of the 2-person BCG is that zero is a weakly dominant strategy and is always the winning number regardless of the choice of the other player
What does the dictator game outlined in Forsythe et al. (1994) aim to do?
isolate strategic behaviour as a reason for rejection
(I send cause I anticipate low offers to be rejected. This is self-regarding behaviour but with the knowledge that others might be other-regarding)
In Grosskopf and Nagel (2008), what does the finding that both academics and students play the n=2 and n>2 games in a similar way suggest?
suggests that people don’t understand the great impact their decision has in the n=2 case
In the first period of Nagel (1995), how does the result compare to the game theoretic solution?
deviates strongly
Name the counter-intuitive result from Grosskopf and Nagel (2008).
Why might this have occurred?
for both students and academics guesses are lower for n>2 if anything
10 times higher incentives given in the n>2 case
(to compensate subjects for the lower chance of winning)
When was Ho et al. published?
1998
Which paper looks at the problem ‘Someone who chooses a number consistent with 2 steps of reasoning might be able to reason all the way, but not expect others to be able to do so’?
Grosskopf and Nagel (2008)
Which paper was published in 2008?
Grosskopf and Nagel
Two papers were published in 1994, what were they?
Forsythe et al. and Hoffman et al.
When was Johnson et al. published?
2002
Name 3 reasons why the sender might send any money at all when playing the dictator game?
inequity aversion
altruism
strategic behavior
(I send cause I anticipate low offers to be rejected. This is self-regarding behaviour but with the knowledge that others might be other-regarding)
Which factors out of repetition, high stakes and cultural/ market institutions affect offers in the ultimatum game?
Which papers explore these further?
all have no significant effect:
repetition- Cooper & Dutcher (2011)
high stakes- Cameron (1999)
cultural and market institutions- Henrich et al. (2002)
(entitlement- Hoffman et al. (1994) also matters)
In Güth et al. (1982)?, rejections cannot be due to confusion. What does their occurrence suggest?
What evidence supports this?
the assumption of self-regarding preferences is incorrect
responders do not only care about their monetary reward; self-regarding assumption appears wrong
What type of game is used in Johnson et al. (2002)? Describe each stage.
Alternating-order bargaining game
1 bargaining with other players
2 with robots and instructions
3 mixing trained and untrained subjects
What year was Nagel published in?
1995
How does the dictator game used in Forsythe et al. (1994) differ from the ultimatum game?
‘Responder’ can no longer reject division’- now called receiver
Name a simple finding in Nagel (1995)
we can often fail to play simple games optimally
What does Hoffman et al. (2004) tell us about the effect of entitlement of offers in the ultimatum game?
entitlement lowers offers
Nagel (1995) uses a guess game with different treatments p = (0.5, 0.67, 1.33), do the distributions over [0,100] differ significantly with treatment?
Yes
What are likely reasons for rejection in the ultimatum game and which papers explore these further?
Are these reasons always aligned?
Inequity aversion - Fehr and Schmidt (1999)
Negative reciprocity- Rabin (1993)
sometimes, not always aligned
Which paper tries to answer the question: ‘Would behaviour follow Nash equilibrium if fewer steps (than infinity) were required?’
Ho et al. (1998)
Describe convergence of choices over time in Ho et al. (1998)
Do choices in games with infinite thresholds (p<1) lie closer to equilibrium than in those with finite thresholds (p>1)?
Choices converge toward Equilibrium over time
No, it is the other way around
Give 3 bottom line results regarding the ultimatum game? (from Güth et al. (1982) + subsequent research)
Results are not lab artefacts
Some individuals are not self-regarding
UG can be (perhaps) used to measure social preferences
What questions arise regarding the robustness of results in Nagel (1995)? (4 points)
Assumes common knowledge of rationality - does this hold?
Do students think like other people?
Do the stakes in the game matter?
Could subjects not calculate the p-average?
Which results summarise findings in this section? (anonymity + self-regarding behaviours)
anonymity is a real issue to be considered in experimental design
Some subjects are quite self-regarding but they can also behave in a pro-social manner in some environments- but they seem to care about those who were unfair to them (NEGATIVE RECIPROCITY)
