Measuring agents’ reaction to private and public information in games with strategic complementarities

Camille Cornand and Frank Heinemann

Experimental Economics, 2014, vol. 17, issue 1, 77 pages

Abstract: In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same precision, because public signals are more informative about the likely behavior of others. We present an experiment in which agents’ optimal actions are a weighted average of the fundamental state and their expectations of other agents’ actions. We measure the responses to public and private signals. We find that, on average, subjects put a larger weight on the public signal. In line with theoretical predictions, as the relative weight of the coordination component in a player’s utility increases, players put more weight on the public signal when making their choices. However, the weight is smaller than in equilibrium, which indicates that subjects underestimate the information contained in public signals about other players’ beliefs. Copyright Economic Science Association 2014

Keywords: Coordination games; Strategic uncertainty; Private information; Public information; C92; D82; D84 (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: Measuring agents' reaction to private and public information in games with strategic complementarities (2014)
Working Paper: Measuring Agents' Reaction to Private and Public Information in Games with Strategic Complementarities (2014)
Working Paper: Measuring Agents’ Reaction to Private and Public Information in Games with Strategic Complementarities (2013)
Working Paper: Measuring Agents' Reaction to Private and Public Information in Games with Strategic Complementarities (2010)
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DOI: 10.1007/s10683-013-9357-9

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