Drift Effect and Timing Without Observability: Experimental Evidence
University of Siena - Department of Economics
University of Siena - Labsi Experimental Economics Laboratory; University of Siena - Department of Social, Political and Cognitive Sciences
University of Verona - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Journal of Economic Behavior and Organization, Vol. 61, No. 3, pp. 393-414, 2006
We provide experimental evidence of Binmore and Samuelson's (1999) insights into modeling the learning process through which equilibrium is selected. They proposed the concept of drift to describe the effect of perturbations on the dynamic process leading to equilibrium in evolutionary games with boundedly rational agents. We test two different versions of the modified Dalek game within a random-matched population. We also assume that the first mover makes his or her decision first ('timing') but the second mover is not informed of the first mover's choice ('lack of observability') to emphasize the learning process taking place within the population. Our results support Binmore and Samuelson's model.
Keywords: Evolutionary games, experiments, drift, forward induction, order of play
JEL Classification: C72, C92Accepted Paper Series
Date posted: March 10, 2006
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