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Experimenting and learning with localized direct communication

Author

Listed:
  • Vincent Mak
  • Rami Zwick

Abstract

We report an experiment in which subjects may learn from each other. Specifically, a “queue” of players who are identically informed ex ante make decisions in sequence over two lotteries. Every player except the first in the queue observes (only) his immediate predecessor’s choice and payoff before making his own decision. In equilibrium decisions are identical from the first or second player onwards in all experimental conditions. However, complete adherence to equilibrium play is seldom observed in our experiment. We further analyze our data using a quantal response equilibrium approach and test for behavioral regularities related to base rate fallacy/conservatism bias, social conformity/rebelliousness, and preference for experimentation (preferring the lottery with potentially more information spillover value). Our estimations reveal a consistent preference for experimentation across conditions, and further analysis offers some support to our surmise that this behavioral regularity is due, in part, to an attempt to influence others behind in the queue. Copyright Economic Science Association 2014

Suggested Citation

  • Vincent Mak & Rami Zwick, 2014. "Experimenting and learning with localized direct communication," Experimental Economics, Springer;Economic Science Association, vol. 17(2), pages 262-284, June.
    • Handle: RePEc:kap:expeco:v:17:y:2014:i:2:p:262-284
    DOI: 10.1007/s10683-013-9366-8
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    More about this item

    Keywords

    Communication; Bayesian learning; Social learning; Preference for experimentation; C92; D83;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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