Saliency of Outside Options in the Lost Wallet Game

13 Pages Posted: 13 Jan 2009

See all articles by James C. Cox

James C. Cox

Georgia State University - Department of Economics

Maroš Servátka

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory

Radovan Vadovic

Instituto Tecnológico Autónomo de México (ITAM)

Date Written: January 10, 2009

Abstract

This paper reports an experiment designed to shed light on an empirical puzzle observed by Dufwenberg and Gneezy (2000) that the size of the foregone outside option by the first mover does not affect the behavior of the second mover in a lost wallet game. Our conjecture was that the original protocol may not have made the size of the forgone outside option salient to second movers. Therefore, we change two features of the Dufwenberg and Gneezy protocol: (i) instead of the strategy method we implement a direct response method (sequential play) for the decision of the second mover; and (ii) we use paper money certificates that are passed between the subjects rather than having subjects write down numbers representing their decisions. We observe that our procedure yields qualitatively the same result as the Dufwenberg and Gneezy experiment, i.e., the second movers do not respond to the change in the outside option of the first movers.

Keywords: Experimental economics, lost wallet game, outside option

JEL Classification: C70, C91

Suggested Citation

Cox, James C. and Servátka, Maroš and Vadovic, Radovan, Saliency of Outside Options in the Lost Wallet Game (January 10, 2009). Available at SSRN: https://ssrn.com/abstract=1326162 or http://dx.doi.org/10.2139/ssrn.1326162

James C. Cox

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-651-8888 (Phone)
404-651-0425 (Fax)

Maroš Servátka (Contact Author)

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory ( email )

Sydney
Australia

Radovan Vadovic

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Av. Camino a Sta. Teresa 930
Col. Héroes de Padierna
Mexico City, D.F. 01000, Federal District 01080
Mexico

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