Estimating Dynamic Games of Oligopolistic Competition: An Experimental Investigation

Salz, Tobias; Vespa, Emanuel

doi:10.3386/w26765

Cited by 12 publications

(9 citation statements)

References 23 publications

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“…Clearly, the set of dynamic game environments is very large; however, there are some patterns in the literature. For example, Battaglini, Nunnari, and Palfrey (), Battaglini, Nunnari, and Palfrey (), Vespa (forthcoming), and Salz and Vespa (forthcoming) study well‐known dynamic games with relatively large state‐spaces and find that equilibrium Markov strategies approximate behavior well . In contrast, the literature on the infinitely repeated prisoner's dilemma has characterized the conditions under which history‐dependent play is likely to prevail.…”

Section: Introductionmentioning

confidence: 99%

Experimenting with the transition rule in dynamic games

Vespa

Wilson²

2019

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In dynamic environments where the strategic setting evolves across time, the specific rule governing the transitions can substantially alter the incentives agents face. This is particularly true when history‐dependent strategies are used. In a laboratory study, we examine whether subjects respond to the transition rule and internalize its effects on continuation values. Our main comparison is between an endogenous transition where future states directly depend on current choices, and exogenous transitions where the future environment is random and independent of actions. Our evidence shows that subjects readily internalize the effect of the dynamic game transition rule on their incentives, in line with history‐dependent theoretical predictions.

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Section: Introductionmentioning

confidence: 99%

Experimenting with the transition rule in dynamic games

Vespa

Wilson²

2019

Self Cite

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“…Several papers document that the comparative static predictions implied by Markov perfect equilibria organize experimental data well. This is the case for example in Palfrey (2012, 2016) who make this point in a dynamic legislative bargaining game with durable public goods; Salz and Vespa (2016) who study an infinite-horizon entry/exit game of oligopolistic competition; Vespa (2016) who studies a dynamic common pool game; and Agranov and Elliott (2018) who investigate decentralized bargaining games with heterogeneous trade opportunities and irreversible exit. On the other hand, there is a large experimental literature on infinite-horizon prisoner's dilemma games, which documents that a majority of subjects use efficient, history-dependent strategies contrary to the MPE prediction of always defecting (see survey by Bó and Fréchette forthcoming).…”

Section: Related Literaturementioning

confidence: 99%

Persistence of power: Repeated multilateral bargaining with endogenous agenda setting authority

Agranov

Cotton

Tergiman

2020

Journal of Public Economics

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We extend a simple repeated, multilateral bargaining model to allow successful agenda setters to hold on to power as long as they maintain the support of a majority of other committee members. Theoretically and experimentally, we compare this Endogenous Power environment with a standard Random Power environment in which agenda setters are appointed randomly each period. Although the theoretical analysis predicts that the two environments are outcome equivalent, the experimental analysis shows substantial differences in behavior and outcomes across the games. The Endogenous Power environment results in the formation of more stable coalitions, less-equitable budget allocations, the persistence of power across periods, and higher long-run inequality than the Random Power environment. We present evidence that the stationary equilibrium refinements traditionally used in the literature fail to predict behavior in either game.

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“…For example, consider the epoch‐making progress of AI—Alphago, 14 is an intelligent player for Go. Game theory has become a standard tool for depicting and demonstrating various game‐like phenomena by providing appropriate mathematical models 15‐18 and for analyzing and predicting agents' behaviors and their decisions by formalizing solution concepts 19,20 . Based on game theory, intelligent agents can make strategic decisions and optimal strategy choices for humans in many scenarios, 21 such as smart transportation 22 and resource allocation 23 .…”

Section: Introductionmentioning

confidence: 99%

Exploring the effects of computational costs in extensive games via modeling and simulation

et al. 2021

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Game theory has become a standard tool for depicting and demonstrating various game‐like phenomena by providing appropriate mathematical models and for analyzing and predicting agents' behaviors and their decisions by formalizing solution concepts. The conventional game model mainly concerns ideal systems that would always guarantee optimal responses, which appears unrealistic for practical game scenarios since decision‐making usually entails resource costs. Therefore, this study considers players' decision‐making in extensive games when the computational cost of searching the strategy space is limited. We start with a new mathematical model of extensive games that features a bound on computational resources during players' decision‐making process such that they can only foresee a part of the available alternatives in the future. This model is more appropriate in predicting players' strategies than the conventional model, under which we investigate the effects of computational costs on players' strategies as well as the computational complexity. Furthermore, a simulation experiment is performed to seek the connection between the amount of resources and the goodness of the outcomes. This study is expected to provide a foundation for players' rational decision‐making with computational costs.

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Estimating Dynamic Games of Oligopolistic Competition: An Experimental Investigation

Cited by 12 publications

References 23 publications

Experimenting with the transition rule in dynamic games

Experimenting with the transition rule in dynamic games

Persistence of power: Repeated multilateral bargaining with endogenous agenda setting authority

Exploring the effects of computational costs in extensive games via modeling and simulation

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