Abstract
Existing laboratory research suggests that the Nash equilibrium in mixed strategies has limited capacity to predict subjects’ behavior in an Oversight Game (OG). We propose that this inconsistency between the game-theoretical solution and subjects’ actual behavior may be due to the elicitation method used in previous laboratory experiments. To test this conjecture, we design a laboratory experiment in which subjects play the OG either using the conventional repeated response method, in which subjects are informed of their opponent’s action after each period, or using a novel strategy method, in which subjects choose their mixed strategy and let the computer randomize. Comparing the elicitation methods shows that it has no effect on subjects’ decisions in the OG, regardless of whether the repeated response or strategy method has been implemented. Under both conditions, subjects uniformly deviate from the Nash equilibrium in mixed strategy.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
In addition, subjects cognitive and strategic capability matters, especially with backwards induction, but also with the comprehension of best strategies in general (Rauhut, 2009; Grehl and Tutić, 2015). For example, Palacios-Huerta und Volij (2008) compare randomization abilities of professional football players and student subjects and find that only players with intensive amounts of experience are able to come close to mixed strategy equilibrium. Walker und Wooders (2001) find similar result among professional contestants in the Wimbledon tennis tournament.
- 2.
Instructions, data and syntax are available from the corresponding author upon request. See [https://uol.de/f/1/inst/sowi/ag/polsys/ONLINE_APPENDIX_Repeated_Response.pdf] for the online Appendix.
- 3.
Due to a programming error, we had to remove 130 cases from the repeated response design for scenario 4.
References
Anderhub, Vital, Dirk Engelmann, and Werner Güth (2002), “An experimental study of the repeated trust game with incomplete information.” Journal of Economic Behavior & Organization, 48, 197–216.
Avenhaus, R. (2004), “Applications of inspection games.” Mathematical Modelling and Analysis, 9, 179–192.
Azar, Ofer and Michael Bar-Eli (2011), “Do soccer players play the mixed-strategy Nash equilibrium?” Applied Economics 43, 2591–3601.
Bock, Olaf, Ingmar Baetge, and Andreas Nicklisch (2014), “hroot – hamburg registration and organization online tool.” European Economic Review, 71, 117–120.
Brandts, Jordi and Garry Charness (2011), “The strategy versus the direct- response method: a first survey of experimental comparisons.” Experimental Economics, 14, 375–398.
Casari, Marco and Timothy N. Cason (2009), “The strategy method lowers measured trustworthy behavior.” Economics Letters 103, 157–159.
Chiappori, Pierre Andre, Steven Levitt and Timothy Groseclose (2002), “Testing mixed-strategy equilibria when players are heterogeneous: The case of penalty kicks in soccer.” American Economic Review 92, 1138–1151.
Fischbacher, Urs (2007), “z-tree: Zurich toolbox for ready-made economic experiments.” Experimental Economics, 10, 171–178.
Giegerenzer, Gerd and D. Goldstein (1996), “Reasoning the fast and frugal way: Models of bounded rationality.” Psychological Review, 103, 650–669.
Goeree, Jacob K. and Charles A. Holt (2001), “Ten little treasures of game theory and ten intuitive contradictions.” The American Economic Review, 91, 1402–1422.
Grehl, Sascha and Andreas Tutić (2015), “Experimental evidence on iterated reasoning in games.” PLOS ONE, 10, e0136524. https://doi.org/https://doi.org/10.1371/journal.pone.0136524
Greiner, Ben (2015), “Subject pool recruitment procedures: Organizing experiments with Orsee.” Journal of the Economic Science Association, 1, 114–125.
McCarty, Nolan and Adam Meirowitz (2007), Political Game Theory: An Introduction. Cambridge University Press, Cambridge.
Minozzi, William and Jonathan Woon (2020), “Direct response and the strategy method in an experimental cheap talk game.” Journal of Behavioral and Experimental Economics 85, 101498.
Molnar, Andras (2019), “SMARTRIQS: A Simple Method Allowing Real-Time Respondent Interaction in Qualtrics Surveys.” Journal of Behavioral and Experimental Finance, 22, 161–169.
Nash, John (1951), “Non-cooperative games.” The Annals of Mathematics, 54, 286–295.
Nosenzo, Daniele, Theo Offerman, Martin Sefton and Ailko van der Veen (2014), “Encouraging compliance: Bonuses versus fines in inspection games.” Journal of Law, Economics, and Organization, 30, 623–648.
Ochs, Jack (1995), “Games with unique, mixed strategy equilibria: An experimental study.” Games and Economic Behavior, 10, 202–217.
Palacios-Huerta, Ignacio (2003), “Professionals play minimax.” Review of Economic Studies 70, 395–415
Palacios-Huerta, Ignacio and Oscar Volij (2008), “Experimentia docet: Professionals play minimax in laboratory experiments.” Econometrica, 76, 71–115.
Palan, Stefan and Christian Schitter (2018). “Prolific.ac – A subject pool for online experiments.” Journal of Behavioral and Experimental Finance 17, 22–27.
Rauhut, H. (2009), “Higher punishment, less control? Experimental evidence on the inspection game.” Rationality and Society, 21, 359–392.
Rauhut, H. (2015), “Stronger inspection incentives, less crime? Further experimental evidence on inspection games.” Rationality and Society, 27, 414–454.
Rauhut, Heiko and Fabian Winter (2010), “A sociological perspective on measuring social norms by means of strategy method experiment.” Social Science Research, 39, 1181–1194.
Selten, R. (1967), “Die Strategiemethode zur Erforschung des eingeschränkt rationalen Verhaltens im Rahmen eines Oligopolexperiments.” In Beiträge zur experimentellen Wirtschaftsforschung (H. Sauermann, ed.), 136–168, Mohr, Tübingen.
Walker, Mark and John Wooders (2001), “Minimax play at Wimbledon.” American Economic Review, 95, 1521–1538.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2022 Springer Fachmedien Wiesbaden GmbH, ein Teil von Springer Nature
About this chapter
Cite this chapter
Lutz, M., Shikano, S., Tepe, M. (2022). Repeated Response versus Strategy Method. Experimental Evidence from an Oversight Game. In: Sauermann, J., Tepe, M., Debus, M. (eds) Jahrbuch für Handlungs- und Entscheidungstheorie. Jahrbuch für Handlungs- und Entscheidungstheorie. Springer VS, Wiesbaden. https://doi.org/10.1007/978-3-658-35878-5_7
Download citation
DOI: https://doi.org/10.1007/978-3-658-35878-5_7
Published:
Publisher Name: Springer VS, Wiesbaden
Print ISBN: 978-3-658-35877-8
Online ISBN: 978-3-658-35878-5
eBook Packages: Social Science and Law (German Language)