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Experiments with the Traveler's Dilemma: Welfare, Strategic Choice and Implicit Collusion

Kaushik Basuy, Leonardo Becchetti () and Luca Stanca ()

No 147, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper investigates behavior in the Traveler's Dilemma game and isolates deviations from textbook predictions caused by di®erences in welfare perceptions and strategic miscalculations. It presents the results of an experimental analysis based on a 2x2 design where the own and the other subject's bonus-penalty parameters are changed independently. We ¯nd that the change in own bonus-penalty alone entirely explains the e®ect on claims of a simultaneous change in one's own and the other's bonus-penalty. An increase in the other subject's bonus-penalty has a signi¯cant negative e®ect on claims when the own bonus-penalty is low, whereas it does not have a signi¯cant e®ect when the own bonus-penalty is high. We also ¯nd that expected claims are inconsistent with actual claims in the asymmetric treatments. Focus- ing on reported strategies, we document substantial heterogeneity and show that changes in choices across treatments are to a large extent explained by risk aversion.

New Economics Papers: this item is included in nep-cbe and nep-exp
Date: 2008-10, Revised 2008-10
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http://repec.dems.unimib.it/repec/pdf/mibwpaper147.pdf First version, 2008 (application/pdf)

Related works:
Journal Article: Experiments with the Traveler’s Dilemma: welfare, strategic choice and implicit collusion (2011) Downloads
Working Paper: Experiments with the Traveler's Dilemma: Welfare, Strategic Choice and Implicit Collusion (2011) Downloads
Working Paper: Experiments with the Traveler's Dilemma: Welfare, Strategic Choice and Implicit Collusion (2008) Downloads
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