Playing the game the others want to play: Keynes’ beauty contest revisited
Kene Boun My (),
Camille Cornand and
Rodolphe Dos Santos Ferreira
No 1712, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon
Abstract:
In Keynes’ beauty contest, agents make evaluations reflecting both an expected fundamental value and the conventional value expected to be set by the market. They thus respond to fundamental and coordination motives, respectively, the prevalence of either being set exogenously. Our contribution is twofold. First, we propose a valuation game in which agents strategically choose how to weight each motive. This game emphasises public information leads agents to favour the coordination motive. Second, we test the game through a laboratory experiment. Subjects tend to conform to theoretical predictions, except when fundamental uncertainty is low relative to strategic uncertainty.
Keywords: dispersed information; public information; beauty contest; coordination; experiment (search for similar items in EconPapers)
JEL-codes: C92 D84 E12 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-exp, nep-gth, nep-hpe, nep-mac and nep-pke
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ftp://ftp.gate.cnrs.fr/RePEc/2017/1712.pdf (application/pdf)
Related works:
Working Paper: Playing the game the others want to play: Keynes’ beauty contest revisited (2016) 
Working Paper: Playing the Game the others want to play: Keynes’ beauty contest revisited (2015)
Working Paper: Playing the game the others want to play: Keynes’ beauty contest revisited (2015) 
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1712
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