Andreas Ortmann

The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria

Cheap talk is shown to facilitate coordination on the unique efficient equilibrium in experimental order-statistic games. This result is roughly consistent with theoretical predictions according to which cheap talk promotes efficient Nash play. The evidence concerning the mechanisms that theory appeals to is mixed: Frequent agreement of messages and actions is consistent with messages being viewed as self-committing. Risk in the underlying game and the absence of self-signaling messages may explain why message profiles are not unanimous. Time-varying message profiles can be interpreted as evidence for players trying to negotiate equilibria and/or trying to rely on secret handshakes.

Trust, Reciprocity, and Social History: A Re-examination

Berg et al. (Games and Economic Behavior, 10, pp. 122–142, 1995) study trust and reciprocity in an investment setting. They find significant amounts of trust and reciprocity and conclude that trust is a guiding behavioral instinct (a “primitive” in their terminology). We modify the way information is presented to participants and, through a questionnaire, prompt strategic reasoning. To our surprise, none of our various treatments led to a reduction in the amount invested. Previously reported experimental results to the contrary did not survive replication. Our results suggest that those by Berg, Dickhaut, and McCabe are rather robust to changes in information presentation and strategic reasoning prompts. We discuss the implications of these findings.

Gender differences in the laboratory: evidence from prisoner's dilemma games

Abstract We implement a prisoner’s dilemma-type game in the laboratory to study whether men and women have different cooperation rates, and whether they respond differently to experiences in previous rounds. We find that women cooperate significantly more than men in the first round; this difference disappears by the last round. We attribute the latter result to the very similar reactions of men and women to experiences they have made in previous rounds. We also find that the gender composition of the subject pool has a significant impact on cooperative behavior.

Trust, repute and the role of non-profit enterprise

This article examines the trust hypothesis: the claim that asymmetric information can explain the existence of non-profit enterprise in certain markets. We argue that this hypothesis, in order to be viable, has to meet three challenges: ‘reputational ubiquity’, ‘incentive compatibility’ and ‘adulteration’. Drawing on modern agency theory, we conclude that the trust hypothesis stands on shaky ground. It can be sustained only under particular conditions that have been neither carefully described in theory nor subject to empirical assessment. The available evidence, patchy and inadequate as it is, seems to suggests that there are some ownership-related differences in aspects of organisational performance connected with asymmetric information. However, there is little evidence that this relates to trustper se or provides a rationale for the existence of non-profit ownership in these industries. We conclude with a plea for substantial research on consumer expectations and provider motivations.

On the origin of convention: evidence from symmetric bargaining games

We use a dynamical systems approach to model the origin of bargaining conventions and report the results of a symmetric bargaining game experiment. Our experiment also provides evidence on the psychological salience of symmetry and efficiency. The observed behavior in the experiment was systematic, replicable, and roughly consistent with the dynamical systems approach. For instance, we do observe unequal-division conventions emerging in communities of symmetrically endowed subjects.

Loss avoidance as selection principle: Evidence from simple stag-hunt games

We investigate experimentally the conjecture that loss avoidance solves the tension in stag-hunt games for which payoff dominance and risk dominance make conflicting predictions. Contrary to received textbook wisdom, money-losing outcomes do shift behavior, albeit not strongly, toward the payoff-dominant equilibrium.

Reasoning in economics and psychology: Why social context matters

Both psychology and economics have been shaped by two sets of competing programs. Roughly, traditional programs in both disciplines have postulated the existence of norms of optimal reasoning and/or behavior. In both disciplines these programs have been challenged by competing ones that, while maintaining the traditional norms of sound reasoning and/or behavior, have argued that human beings fail miserably at both.

The Unbundling Regime for Electricity Utilities in the EU: A Case of Legislative and Regulatory Capture?

Theory and empirics suggest that by curbing competition, incumbent electricity companies which used to be, and here are referred to as, Vertically Integrated Utilities (VIUs), can increase their profitability through combined ownership of generation and transmission and/or distribution networks. Because curbing competition is generally believed to be welfare-reducing, EU law requires unbundling (separation) of the VIU networks. However, the EU allows its member states the choice between incomplete (legal) and complete (ownership) unbundling. There is tantalizing anecdotal evidence that VIUs have tried to influence this choice through questionable means of persuasion. Such means of persuasion should be more readily available in countries with a more corrupted political culture. This paper shows that among the old EU member states, countries which are perceived as more corrupt are indeed more likely to apply weaker forms of unbundling. Somewhat surprisingly, we do not obtain a similar finding for the EU member states that acceded in 2004. We provide a conjecture for this observation.

A Game-Theoretic Explanation of the Administrative Lattice in Institutions of Higher Learning

We provide a game-theoretic model of academic organizations, focusing on the strategic interaction of prototypical overseers, administrators, and professors. By identifying key principal-agent games routinely played in colleges and universities, we begin to unpack the black box typically used to conceptualize these institutions. Our approach suggests an explanation for the seemingly inevitable drift of institutions of higher education into such well-documented phenomena as academic ratchet and administrative lattice and builds an understanding of the organizational conditions in which drift would be restrained.

Are the Unskilled Really that Unaware? An Alternative Explanation

In a series of articles and manuscripts (e.g., [Kruger, J., & Dunning, D. (1999). Unskilled and unaware of it: How difficulties in recognizing ones own incompetence lead to inflated self-assessment. Journal of Personality and Social Psychology, 77, 1121-1134; Dunning, D., Johnson, K., Ehrlinger, J., & Kruger, J. (2003). Why people fail to recognize their own incompetence. Current Directions in Psychological Science, 12, 83-87; Ehrlinger, J., Johnson, K., Banner, M., Kruger, J., & Dunning, D. (2008). Why the unskilled are unaware: Further exploration of (absent) self-insight among the incompetent. Organizational Behavior and Human Decision Processes, 105, 98-121.]), Dunning, Kruger and their collaborators argued that the unskilled lack the metacognitive ability to realize their incompetence. We propose that the alleged unskilled-and-unaware problem - rather than being one of biased judgements - is a signal extraction problem that differs for the skilled and the unskilled. Specifically, the unskilled face a tougher inference problem than the skilled.