The investment game with asymmetric information

Giorgio Coricelli (), L.G. Morales and A. Mahlstedt

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: We analyze the effects of introducing asymmetric information and expectations in the investment game (Berg et al., 1995). In our experiment, only the trustee knows the size of the surplus. Subjects’ expectations about each other’s behavior are also elicited. Our results show that average payback levels increase with the average amount sent. Asymmetric information does not reduce the amounts sent and returned, as compared with previous experimental studies. The first movers’ choices increase with their expectations about the second movers’ payback, whose choices depend in turn on the difference between expected and actual amounts received.

Keywords: game theory; trust; reciprocity (search for similar items in EconPapers)
JEL-codes: C70 C91 D63 D64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
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Related works:
Journal Article: THE INVESTMENT GAME WITH ASYMMETRIC INFORMATION (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:esi:discus:2003-29

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