Measuring Agents’ Reaction to Private and Public Information in Games with Strategic Complementarities
Camille Cornand and
Franck Heinemann (frank.heinemann@ww.tu-berlin.de)
Additional contact information
Franck Heinemann: Technische Universität Berlin, Chair of Macroeconomics, H 52 Straße des 17. Juni 135, 10 623 Berlin, Germany
No 1341, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon
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.
Keywords: coordination games; strategic uncertainty; private information; public information (search for similar items in EconPapers)
JEL-codes: C92 D82 D84 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (22)
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ftp://ftp.gate.cnrs.fr/RePEc/2013/1341.pdf (application/pdf)
Related works:
Journal Article: 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 (2014)
Working Paper: Measuring Agents' Reaction to Private and Public Information in Games with Strategic Complementarities (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1341
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