Signaling Without Common Prior: An Experiment

CentER Discussion Paper Series No. 2009-28

29 Pages Posted: 13 May 2009

See all articles by Michalis Drouvelis

Michalis Drouvelis

University of Birmingham - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Wieland Müller

University of Vienna, Department of Economics & VCEE; Tilburg University, Department of Economics & CentER

Alex Possajennikov

University of Nottingham - School of Economics

Date Written: April 21, 2009

Abstract

The common prior assumption is pervasive in game-theoretic models with incomplete information. This paper investigates experimentally the importance of inducing a common prior in a two-person signaling game. For a specific probability distribution of the sender’s type, the long-run behavior without an induced common prior is shown to be different from the behavior when a common prior is induced, while for other distributions behavior is similar under both regimes. We also present a learning model that allows players to learn about the other players’ strategies and the prior distribution of the sender’s type. We show that this learning model accurately accounts for all main features of the data.

Keywords: common prior, signaling, experiment, learning

JEL Classification: C72, C92, D83

Suggested Citation

Drouvelis, Michalis and Müller, Wieland and Possajennikov, Alex, Signaling Without Common Prior: An Experiment (April 21, 2009). CentER Discussion Paper Series No. 2009-28. Available at SSRN: https://ssrn.com/abstract=1403828 or http://dx.doi.org/10.2139/ssrn.1403828

Michalis Drouvelis (Contact Author)

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

HOME PAGE: http://sites.google.com/site/michalisdrouvelis/

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Wieland Müller

University of Vienna, Department of Economics & VCEE ( email )

Oskar-Morgenstern-Platz 1
Vienna, A-1090
Austria

HOME PAGE: http://https://homepage.univie.ac.at/wieland.mueller/

Tilburg University, Department of Economics & CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/w.mueller-3.htm

Alex Possajennikov

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

HOME PAGE: http://www.nottingham.ac.uk/~lezap/

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