Abstract: From transportation to Internet communications, modern life is enveloped in network tra... more Abstract: From transportation to Internet communications, modern life is enveloped in network traffic in which multiple independent users make strategic choices over congestible routes. While there has been phenomenal progress in computer science, economics, and transportation research in characterizing the outcomes in such contexts, most development is based on game-theoretic analysis assuming selfish behavior by rational agents. Apart from very simple and isolated cases, there is lack of empirical evidence regarding the validity of this approach in predicting real behavior. We report a controlled laboratory experiment in which large groups of subjects repeatedly and independently made route choices in a computerized traffic network for payoff contingent on performance. We tested game-theoretic predictions of traffic flow with and without providing users en route information on the traffic flow at network crossroads. Despite the complexity of the network to the subjects, observed t...
Engineering, Construction and Architectural Management, 2019
Purpose The purpose of this paper is to investigate the impact of incentive contracts in multi-pa... more Purpose The purpose of this paper is to investigate the impact of incentive contracts in multi-partner project teams (MPPTs) on the agents’ effort expenditure and project performance, analyze how the agents allocate their efforts between production and cooperation and offer suggestions for project managers on how to design incentive contracts. Design/methodology/approach The paper proposes a model of MPPT in which agents are inequity-averse and their effort expenditures are exogenously bounded. An extensive numerical example is presented in online Appendix 2 to illustrate the theoretical results. Findings The paper suggests that if the potential benefit of the agents’ cooperation in MPPT is high or if both agents exhibit inequity aversion and the efforts’ marginal costs are low, then group-based incentive contracts outperform individual-based incentive contracts. It also shows that the impact of the incentive contract on the agents’ effort expenditure and project team performance is...
We propose a committee extension of the individual sequential search model called the “secretary ... more We propose a committee extension of the individual sequential search model called the “secretary problem,” where collective decisions on when to stop the search are reached via a prespecified voting rule. We offer a game-theoretic analysis of our model and then report two experiments on three-person committees with either uncorrelated or perfectly correlated preferences under three different voting rules followed by a third experiment on single decision makers. Relative to equilibrium predictions, committees with uncorrelated preferences oversearched under minority and majority voting rules but, otherwise, undersearched or approximated equilibrium play. Individually, committee members were often less strategic when their preferences were uncorrelated than when they were perfectly correlated. Collectively, committees’ decisions were more strategic than single decision makers’ only under the unanimity rule, although still not significantly better in terms of the decision makers’ welfa...
Page 87. Chapter 4 COORDINATION IN THE AGGREGATE WITHOUT COMMON KNOWLEDGE OR OUTCOME INFORMATION ... more Page 87. Chapter 4 COORDINATION IN THE AGGREGATE WITHOUT COMMON KNOWLEDGE OR OUTCOME INFORMATION Amnon Rapoport University of Arizona Darryl A. Seale University of Nevada Las Vegas James ...
We consider mixed populations (N 1/4 21) of genuine (humans) and arti.cial (robots) agents repeat... more We consider mixed populations (N 1/4 21) of genuine (humans) and arti.cial (robots) agents repeatedly interacting in small groups whose composition is changed randomly from round to round. Our purpose is to study the spread of cooperative or non-cooperative behavior over time in populations playing a 3-person centipede game by manipulating the behavior of the robots (cooperative vs. noncooperative) and their proportion in the population. Our results convey a positive message: adding a handful of cooperative robots increases the propensity of the genuine subjects to cooperate over time, whereas adding a handful of non-cooperative agents does not decrease this propensity. If there are enough hard-core cooperative subjects in the population, they not only negate the behavior of the non-cooperative robots but also induce other subjects to behave more cooperatively.
Disagreements between psychologists and economists about the need for and size of financial incen... more Disagreements between psychologists and economists about the need for and size of financial incentives continue to be hotly discussed. We examine the effects of financial incentives in a class of interactive decision-making situations, called centipede games, in which mutual trust is essential for cooperation. Invoking backward induction, the Nash equilibrium solution for these games is counterintuitive. Our previous research showed that when the number of players in the centipede game is increased from two to three, the game is iterated in time, the players are rematched, and the stakes are unusually high, behavior approaches equilibrium play. Results from the present study show that reducing the size of the stakes elicits dramatically different patterns of behavior. We argue that when mutual trust is involved, the magnitude of financial incentives can induce a considerable difference.
Journal of Economic Behavior & Organization, 2004
We study a class of queueing problems with endogenous arrival times formulated as non-cooperative... more We study a class of queueing problems with endogenous arrival times formulated as non-cooperative n-person games in normal form. With multiple equilibria in pure strategies, these queueing games give rise to problems of tacit coordination. We first describe a Markov chain algorithm used to compute the symmetric mixed-strategy equilibrium solution, and then report the results of an experimental study of a large-scale (n=20) queueing game with fixed service time, FIFO queue discipline, and no early arrivals. Our results show consistent and replicable patterns of arrival that provide strong support for mixed-strategy equilibrium play on the aggregate but not individual level.
A model of coalition government formation is presented in which inefficient, non-minimal winning ... more A model of coalition government formation is presented in which inefficient, non-minimal winning coalitions may form in Nash equilibrium. Predictions for five games are presented and tested experimentally. The experimental data support potential maximization as a refinement of Nash equilibrium. In particular, the data support the prediction that non-minimal winning coalitions occur when the distance between policy positions of the parties is small relative to the value of forming the government. These conditions hold in games 1, 3, 4 and 5, where subjects played their unique potential-maximizing strategies 91, 52, 82 and 84 percent of the time, respectively. In the remaining game (Game 2) experimental data support the prediction of a minimal winning coalition. Players A and B played their unique potential-maximizing strategies 84 and 86 percent of the time, respectively, and the predicted minimal-winning government formed 92 percent of the time (all strategy choices for player C con...
Abstract: From transportation to Internet communications, modern life is enveloped in network tra... more Abstract: From transportation to Internet communications, modern life is enveloped in network traffic in which multiple independent users make strategic choices over congestible routes. While there has been phenomenal progress in computer science, economics, and transportation research in characterizing the outcomes in such contexts, most development is based on game-theoretic analysis assuming selfish behavior by rational agents. Apart from very simple and isolated cases, there is lack of empirical evidence regarding the validity of this approach in predicting real behavior. We report a controlled laboratory experiment in which large groups of subjects repeatedly and independently made route choices in a computerized traffic network for payoff contingent on performance. We tested game-theoretic predictions of traffic flow with and without providing users en route information on the traffic flow at network crossroads. Despite the complexity of the network to the subjects, observed t...
Engineering, Construction and Architectural Management, 2019
Purpose The purpose of this paper is to investigate the impact of incentive contracts in multi-pa... more Purpose The purpose of this paper is to investigate the impact of incentive contracts in multi-partner project teams (MPPTs) on the agents’ effort expenditure and project performance, analyze how the agents allocate their efforts between production and cooperation and offer suggestions for project managers on how to design incentive contracts. Design/methodology/approach The paper proposes a model of MPPT in which agents are inequity-averse and their effort expenditures are exogenously bounded. An extensive numerical example is presented in online Appendix 2 to illustrate the theoretical results. Findings The paper suggests that if the potential benefit of the agents’ cooperation in MPPT is high or if both agents exhibit inequity aversion and the efforts’ marginal costs are low, then group-based incentive contracts outperform individual-based incentive contracts. It also shows that the impact of the incentive contract on the agents’ effort expenditure and project team performance is...
We propose a committee extension of the individual sequential search model called the “secretary ... more We propose a committee extension of the individual sequential search model called the “secretary problem,” where collective decisions on when to stop the search are reached via a prespecified voting rule. We offer a game-theoretic analysis of our model and then report two experiments on three-person committees with either uncorrelated or perfectly correlated preferences under three different voting rules followed by a third experiment on single decision makers. Relative to equilibrium predictions, committees with uncorrelated preferences oversearched under minority and majority voting rules but, otherwise, undersearched or approximated equilibrium play. Individually, committee members were often less strategic when their preferences were uncorrelated than when they were perfectly correlated. Collectively, committees’ decisions were more strategic than single decision makers’ only under the unanimity rule, although still not significantly better in terms of the decision makers’ welfa...
Page 87. Chapter 4 COORDINATION IN THE AGGREGATE WITHOUT COMMON KNOWLEDGE OR OUTCOME INFORMATION ... more Page 87. Chapter 4 COORDINATION IN THE AGGREGATE WITHOUT COMMON KNOWLEDGE OR OUTCOME INFORMATION Amnon Rapoport University of Arizona Darryl A. Seale University of Nevada Las Vegas James ...
We consider mixed populations (N 1/4 21) of genuine (humans) and arti.cial (robots) agents repeat... more We consider mixed populations (N 1/4 21) of genuine (humans) and arti.cial (robots) agents repeatedly interacting in small groups whose composition is changed randomly from round to round. Our purpose is to study the spread of cooperative or non-cooperative behavior over time in populations playing a 3-person centipede game by manipulating the behavior of the robots (cooperative vs. noncooperative) and their proportion in the population. Our results convey a positive message: adding a handful of cooperative robots increases the propensity of the genuine subjects to cooperate over time, whereas adding a handful of non-cooperative agents does not decrease this propensity. If there are enough hard-core cooperative subjects in the population, they not only negate the behavior of the non-cooperative robots but also induce other subjects to behave more cooperatively.
Disagreements between psychologists and economists about the need for and size of financial incen... more Disagreements between psychologists and economists about the need for and size of financial incentives continue to be hotly discussed. We examine the effects of financial incentives in a class of interactive decision-making situations, called centipede games, in which mutual trust is essential for cooperation. Invoking backward induction, the Nash equilibrium solution for these games is counterintuitive. Our previous research showed that when the number of players in the centipede game is increased from two to three, the game is iterated in time, the players are rematched, and the stakes are unusually high, behavior approaches equilibrium play. Results from the present study show that reducing the size of the stakes elicits dramatically different patterns of behavior. We argue that when mutual trust is involved, the magnitude of financial incentives can induce a considerable difference.
Journal of Economic Behavior & Organization, 2004
We study a class of queueing problems with endogenous arrival times formulated as non-cooperative... more We study a class of queueing problems with endogenous arrival times formulated as non-cooperative n-person games in normal form. With multiple equilibria in pure strategies, these queueing games give rise to problems of tacit coordination. We first describe a Markov chain algorithm used to compute the symmetric mixed-strategy equilibrium solution, and then report the results of an experimental study of a large-scale (n=20) queueing game with fixed service time, FIFO queue discipline, and no early arrivals. Our results show consistent and replicable patterns of arrival that provide strong support for mixed-strategy equilibrium play on the aggregate but not individual level.
A model of coalition government formation is presented in which inefficient, non-minimal winning ... more A model of coalition government formation is presented in which inefficient, non-minimal winning coalitions may form in Nash equilibrium. Predictions for five games are presented and tested experimentally. The experimental data support potential maximization as a refinement of Nash equilibrium. In particular, the data support the prediction that non-minimal winning coalitions occur when the distance between policy positions of the parties is small relative to the value of forming the government. These conditions hold in games 1, 3, 4 and 5, where subjects played their unique potential-maximizing strategies 91, 52, 82 and 84 percent of the time, respectively. In the remaining game (Game 2) experimental data support the prediction of a minimal winning coalition. Players A and B played their unique potential-maximizing strategies 84 and 86 percent of the time, respectively, and the predicted minimal-winning government formed 92 percent of the time (all strategy choices for player C con...
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