The Predominant Role of Signal Precision in Experimental Beauty Contests

31 Pages Posted: 27 Jan 2015

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GATE Working Paper Series

Université de Lyon - Groupe d'Analyse et de Théorie Economique Lyon Saint-Etienne (GATE)

Camille Cornand

Groupe d'Analyse et de Théorie Economique (GATE), CNRS, University of Lyon

Romain Baeriswyl

Ludwig Maximilian University of Munich (LMU)

Date Written: 2014

Abstract

The weight assigned to public information in Keynesian beauty contest depends on the signal precision and on the degree of strategic complementarities. This experimental study shows that the response of subjects to changes in the signal precision and in the degree of strategic complementarities is qualitatively consistent with theoretical predictions, though quantitatively weaker. The weaker subjects’ response to changes in the signal precision, however, mainly drives the weight observed in the experiment, making strategic complementarities and overreaction an issue of second order.

Keywords: heterogeneous information, beauty contest, experiment, public information

JEL Classification: D82, D84, E58

Suggested Citation

Working Paper Series, GATE and Cornand, Camille and Baeriswyl, Romain, The Predominant Role of Signal Precision in Experimental Beauty Contests (2014). Available at SSRN: https://ssrn.com/abstract=2556122 or http://dx.doi.org/10.2139/ssrn.2556122

GATE Working Paper Series

Université de Lyon - Groupe d'Analyse et de Théorie Economique Lyon Saint-Etienne (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France

HOME PAGE: http://www.gate.cnrs.fr/

Camille Cornand (Contact Author)

Groupe d'Analyse et de Théorie Economique (GATE), CNRS, University of Lyon ( email )

93 Chemin des Mouilles
Ecully, 69130
France

Romain Baeriswyl

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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