Claudia Keser () (Institut für Statistik und mathematische Wirtschaftstheorie, Universität Karlsruhe, Rechenzentrum, Zirkel 2, D-76128 Karlsruhe, Germany) Roy Gardner () (Department of Economics and Workshop in Political Theory, Indiana University, Bloomington, Indiana 47405, USA)
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This paper describes the results of an experiment applying the strategy method to analyze the behavior of subjects in an 8-player common pool resource (CPR) game. The CPR game consists of a constituent game played for 20 periods. The CPR game has a unique optimum and a unique subgame perfect equilibrium; the latter involves overinvestment in the appropriation from the CPR. Sixteen students, all experienced in game theory, were recruited to play the CPR game over the course of 6 weeks. In the first phase of the experiment, they played the CPR game on-line 3 times. In the second phase of the experiment, the tournament phase, they designed strategies which were then played against each other. At the aggregate level, subgame perfect equilibrium organizes the data fairly well. At the individual level, however, fewer than 5% of subjects play in accordance with the game equilibrium prediction.
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Karl-Martin Ehrhart & Roy Gardner & Juergen von Hagen & Claudia Keser, 2006.
"Budget Processes: Theory and Experimental Evidence,"
Caepr Working Papers
2006-009, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
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Other versions:
Karl-Martin Ehrhart & Roy Gardner & Jürgen von Hagen & Claudia Keser, 2006.
"Budget Processes: Theory and Experimental Evidence,"
Discussion Papers
146, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
[Downloadable!]