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Framing and repeated competition

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  • Masiliūnas, Aidas
  • Nax, Heinrich H.

Abstract

We use a unified framework to model rent-seeking (Tullock) contests and games of strategic complements or substitutes. In each game, we compare an ‘abstract’ frame with an ‘economic’ frame. We find more competitive behavior under economic than under abstract framing in the contest and in the game of strategic complements, but not in the game of strategic substitutes. Variation in the strategic nature of the game interacts differently with preferences than with beliefs, allowing us to identify that framing operates primarily through beliefs, and diminishes as beliefs are updated. We model beliefs and preferences using a static and a dynamic framework and show that average choices and adaptation behavior can be explained if both preferences and beliefs are more competitive under economic framing. Our results suggest that some of the commonly observed competitive behavior in contest and oligopoly experiments could be explained by non-abstract framing being used in these studies.

Suggested Citation

  • Masiliūnas, Aidas & Nax, Heinrich H., 2020. "Framing and repeated competition," Games and Economic Behavior, Elsevier, vol. 124(C), pages 604-619.
    • Handle: RePEc:eee:gamebe:v:124:y:2020:i:c:p:604-619
    DOI: 10.1016/j.geb.2020.10.002
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    2. Nobuyuki Hanaki & Aidas Masiliunas, 2021. "Market Concentration and Incentives to Collude in Cournot Oligopoly Experiments," ISER Discussion Paper 1131, Institute of Social and Economic Research, Osaka University.

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    More about this item

    Keywords

    Framing; Contests; Strategic complements; Strategic substitutes; Beliefs;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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