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Individual Decision Making in Exogenous Targeting Instrument Experiments

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  • John Spraggon
Abstract
The experimental treatments analysed in this paper are simple in that there is a unique Nash equilibrium resulting in each player having a dominant strategy. However, the data show quite clearly that subjects do not always choose this strategy. In fact, when this dominant strategy is not a “focal” outcome it does not even describe the average decision adequately. It is shown that average individual decisions are best described by a decision error model based on a censored distribution as opposed to the truncate regression model which is typically used in similar studies. Moreover it is shown that in the treatments where the dominant strategy is not “focal” dynamics are important with average subject decisions initially corresponding to the “focal” outcome and then adjusting towards the Nash prediction. Overall, 66.7% of subjects are consistent with Payoff Maximization, 27.8% are consistent with an alternate preference maximization and 5.6% are random.

Suggested Citation

  • John Spraggon, 2002. "Individual Decision Making in Exogenous Targeting Instrument Experiments," McMaster Experimental Economics Laboratory Publications 2002-01, McMaster University.
    • Handle: RePEc:mcm:mceelp:2002-01
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    File URL: http://socserv.socsci.mcmaster.ca/~mceel/papers/mhgiii.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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