Speculation rather than enterprise? Keynes' beauty contest revisited in theory and experiment
Kene Boun My (),
Camille Cornand and
Rodolphe Dos Santos Ferreira ()
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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. Abstract In Keynes' beauty contest, agents make evaluations reflecting both an expected fun
Keywords: dispersed information; public information; beauty contest; coordination; experiment (search for similar items in EconPapers)
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Published in Workshop on Complexity: Theory and Experimental analyses, Université de Nice, Oct 2017, Nice, France
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Working Paper: Speculation Rather than Enterprise? Keyness Beauty Contest Revisited in Theory and Experiment (2017)
Working Paper: Speculation rather than enterprise? Keynes' beauty contest revisited in theory and experiment (2017)
Working Paper: Speculation rather than enterprise? Keynes’ beauty contest revisited in theory and experiment (2017)
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