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Invitation Games: An Experimental Approach to Coalition Formation

Author

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  • Takaaki Abe

    (School of Political Science and Economics, Waseda University, Tokyo 169-8050, Japan
    These authors contributed equally to this work.)

  • Yukihiko Funaki

    (School of Political Science and Economics, Waseda University, Tokyo 169-8050, Japan
    These authors contributed equally to this work.)

  • Taro Shinoda

    (School of Political Science and Economics, Waseda University, Tokyo 169-8050, Japan
    These authors contributed equally to this work.)

Abstract

This paper studies how to form an efficient coalition—a group of people. More specifically, we compare two mechanisms for forming a coalition by running a laboratory experiment and reveal which mechanism leads to higher social surplus. In one setting, we invite the subjects to join a meeting simultaneously, so they cannot know the other subjects’ decisions. In the other setting, we ask them sequentially, which allows each subject to know his or her predecessor’s choice. Those who decide to join the meeting form a coalition and earn payoffs according to their actions and individual preferences. As a result, we obtain the following findings. First, the sequential mechanism induces higher social surplus than the simultaneous mechanism. Second, most subjects make choices consistent with the subgame-perfect Nash equilibrium in the sequential setting and choose the dominant strategy in the simultaneous setting, when a dominant strategy exists. Finally, when the subjects need to look further ahead to make a theoretically rational choice, they are more likely to fail to choose rationally.

Suggested Citation

  • Takaaki Abe & Yukihiko Funaki & Taro Shinoda, 2021. "Invitation Games: An Experimental Approach to Coalition Formation," Games, MDPI, vol. 12(3), pages 1-20, August.
  • Handle: RePEc:gam:jgames:v:12:y:2021:i:3:p:64-:d:616024
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    References listed on IDEAS

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    Cited by:

    1. Michela Chessa & Nobuyuki Hanaki & Aymeric Lardon & Takashi Yamada, 2022. "An experiment on the Nash program: Comparing two strategic mechanisms implementing the Shapley value," ISER Discussion Paper 1175, Institute of Social and Economic Research, Osaka University.
    2. Chessa, Michela & Hanaki, Nobuyuki & Lardon, Aymeric & Yamada, Takashi, 2022. "The effect of choosing a proposer through a bidding procedure in implementing the Shapley value," Journal of Economic Psychology, Elsevier, vol. 93(C).
    3. Chessa, Michela & Hanaki, Nobuyuki & Lardon, Aymeric & Yamada, Takashi, 2023. "An experiment on the Nash program: A comparison of two strategic mechanisms implementing the Shapley value," Games and Economic Behavior, Elsevier, vol. 141(C), pages 88-104.
    4. Michela Chessa & Nobuyuki Hanaki & Aymeric Lardon & Takashi Yamada, 2022. "Cost of complexity in implementing the Shapley value by choosing a proposer through a bidding procedure," ISER Discussion Paper 1176, Institute of Social and Economic Research, Osaka University.

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