Anxiety and Learning in Dynamic and Static Clock Game Experiments

25 Pages Posted: 20 Sep 2010

See all articles by Min Jeong Kang

Min Jeong Kang

California Institute of Technology

Debajyoti Ray

California Institute of Technology

Colin Camerer

California Institute of Technology - Division of the Humanities and Social Sciences

Date Written: September 19, 2010

Abstract

In clock games, agents receive differently-timed private signals when an asset value is above its fundamental. The price crashes to the fundamental when K of N agents have decided to sell. If selling decisions are private, bubbles can be sustained because people delay selling, after receiving signals, knowing that others will delay too. Our results replicate the main features of the one previous experimental study of clock game (in two subject pools): Selling delays are shorter than predicted, but converge toward equilibrium predictions over repeated trials. We also find that delays are shorter in a dynamic game in which selling decisions unfold over time, compared to a static equivalent in which subjects precommit to selling decisions. A model of learning with growing anxiety after signal arrival can reproduce the empirical observations of shorter-than-predicted delay, smaller delay after later signal arrival, and shorter delays in dynamic games.

Keywords: Clock Games, Anxiety, Learning, Experimental Economics, Behavioural GameTheory, Price Bubbles

JEL Classification: C92, C72, D03

Suggested Citation

Kang, Min Jeong and Ray, Debajyoti and Camerer, Colin F., Anxiety and Learning in Dynamic and Static Clock Game Experiments (September 19, 2010). Available at SSRN: https://ssrn.com/abstract=1679474 or http://dx.doi.org/10.2139/ssrn.1679474

Min Jeong Kang

California Institute of Technology ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States

Debajyoti Ray

California Institute of Technology ( email )

Pasadena, CA 91125
United States

Colin F. Camerer (Contact Author)

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
626-395-4054 (Phone)
626-432-1726 (Fax)

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