Using or Hiding Private Information? An Experimental Study of Zero-Sum Repeated Games with Incomplete Information

38 Pages Posted: 8 Apr 2011 Last revised: 23 Jul 2013

See all articles by Nicolas Jacquemet

Nicolas Jacquemet

Paris School of Economics (PSE); Université Paris I Panthéon-Sorbonne

Frederic Koessler

Paris School of Economics (PSE)

Date Written: February 2, 2011

Abstract

This paper studies experimentally the value of private information in strictly competitive interactions with asymmetric information. We implement in the laboratory three examples from the class of zero-sum repeated games with incomplete information on one side and perfect monitoring. The stage games share the same simple structure, but differ markedly on how information should be optimally used once they are repeated. Despite the complexity of the optimal strategies, the empirical value of information coincides with the theoretical prediction in most instances. In particular, it is never negative, it decreases with the number of repetitions, and it is nicely bounded below by the value of the infinitely repeated game and above by the value of the one-shot game. Subjects are unable to completely ignore their information when it is optimal to do so, but the use of information in the lab reacts qualitatively well to the type and length of the game being played.

Keywords: Concavification, Laboratory Experiments, Incomplete Information, Value of Information, Zero-Sum Repeated Games

JEL Classification: C72, D82

Suggested Citation

Jacquemet, Nicolas and Koessler, Frederic, Using or Hiding Private Information? An Experimental Study of Zero-Sum Repeated Games with Incomplete Information (February 2, 2011). Games and Economic Behavior, Vol. 78, No. 1, 2013, Available at SSRN: https://ssrn.com/abstract=1803655 or http://dx.doi.org/10.2139/ssrn.1803655

Nicolas Jacquemet (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, 75005
France

HOME PAGE: http://www.nicolasjacquemet.com/

Frederic Koessler

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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