20 - payoff irrelevant cues Flashcards
(26 cards)
Schellings hypothesis
- in pure cood games - payoff irrelevant cues make some strategies salient - draws attentions to some ways of coordination
what is a pure coordination game
games where players are indifferent between equilibrium and indifferent between disequilibrium
what is a payoff irrelevant cue
in mixed motive cood game
- can help coordination in mixed motive game
- where it is important to reach an agreement
- players have opposing interests
Isoni et al (2013)
aim
do payoff irrelevant cues help make some ways of coordinating more focal in bargaining over division of resources
why study mixed motive coordination games
- division requires agreement
- opposed interests over which agreement
what is the bargaining table game
- 2 player one shot game
- each player has a coloured base square
- disks in the table that have numerical value in them
- any player can claim any disk regardless of location/value
- no communication
- claims made independently
- agreement - no disk claimed by both
- if there is agreement - each player gets value of disks they claimed
- gets 0 if they both choose the same disk
what are the key features of the bargaining table games
- disks = valuable objects to divide between players
- payoff irrelevant cues = disk locations - observable to both
what are the 2 potential sources of inefficiency
- failure to agree - both get 0 if both claim the same disk
- failure to claim all disks - not claimed = wasted payoffs
Isoni et al 2013
experimental design
- no communication
- subjects play 24 different bargaining table games in randomly selected pairs
- fixed pairs
- games differ in number of disks, value of disks, location of disks
- players randomly get payoff from 1 of the selected 24 games they play
- each game = one shot game
describe what game 1 is
- 2 disks on the table - one close to red player, the other close to blue player
- any player can claim any of the disks/both/neither
- opposed interest over the coordination equilibria (5,6) and (6,5)
- how will they coordinate - will they use
what is aim of
Isoni
will subjects payoff irrelevant cues from rule of proximity - to help coordinate between who gets the 6 and 5 payoff
- help them coordinate on agreement ?
how can you apply Schelling hypothesis to the Isoni study
- predicts that players will use the rule of proximity to determine how to divide the disks between them - to coordinate on agreement
what is the rule of proximity
how can this rule be applied to the game
- each player only claim the disk that is nearer to their base than to the other
- efficient way to make the split
- coordinate
- use of disk location to coordinate
describe what game 3 is
how is it different to game 1
same as game 1 - same payoffs - choosing between splitting the 5 and 6
- but rule of proximity does not apply - 5 and 6 equally distanced from both players
what does Schelling view suggest will happen in game 3 compared to game 1
players less likely to agree in G3 than in G1
players will earn less on average in G3 - unable to coordinate
what do Isoni calculate
between the pairings
- agreement rate = proportion of all pairings with agreements
- agree/games played - earnings efficiency index = average combined payoffs achieved / total payoffs on table (proportion of available earnings that subjects receive between them)
Isoni
comparing G1 and G3
results
G1 has higher earnings efficiency percentage = subjects receive a higher proportion of earnings in the game where rule of proximity applies
- favoured player earns more on average than unfavoured player
G3
no favoured player
- having proximitity rule = some efficiency gain
describe what game 17 is
how is it different to game 1 and 3
- introduces more disks of same value
- total value of disks is still 11 (before it was choice between 5 and 6)
- now value spread across more disks (sum of 6 surrounding red, sum of 5 surrounding blue)
- proximity rule applies
what is game 19
same as game 17 - but all in straight line
- proximity rule doesnt apply
results between game 17 and 19
game 17 compared to 19
* higher agreement rate = 62%
* higher earnings efficiency
* favoured red earns more on average than blue
game 19
* no favoured player
* low agreement rate
* low earnings efficiency
> the proximity rule give substantial efficient
main takeaway from
Isoni
no communication
what do locations affect?
- locations do not affect disk values or available options
but they do affect:
* likelihood of agreement
* earnings efficiency
* relative earnings
what is the driving mechanism behind the Isoni study
rule of proximity - visual display
* most salient guide to division
- helps both players coordinate
- even less favoured player has reason to follow the cue - otherwise would get 0
what is earnings efficiency
the proportion of available earnings that subjects receive between them
what is the communication design
Isoni et al (2014)
- limited communication
- use bargaining tables
- 90 seconds of communication
- get to view the claims of their partner, and ‘accept’ their claims or not
- game ends if both players ‘accept’ or 90 seconds ends
