Darryl A. Seale

Coordination and Learning Behavior in Large Groups with Asymmetric Players

We study a class of large-group, noncooperative, iterated market entry games with complete information, binary choices, and asymmetric players in which the incentive of each player to enter the market decreases the larger the number of entrants. Experimental results from two different studies show remarkable coordination on the aggregate level, which is accounted for successfully by the Nash equilibrium solution. The equilibrium solution is less successful in accounting for the differences among types of players with differential entry costs or differences among players of the same type. Rather, the behavioral patterns observed on the aggregate level are accounted for by a reinforcement-based learning model postulating an initial distribution of individual cutoff points. These cutoff points are assumed to change over time, at a decreasing rate, as a joint function of the decision and outcome of the preceding period. Journal of Economic Literature Classification Numbers: C7, D5, D8.

Optimal stopping behavior with relative ranks: the secretary problem with unknown population size

We examine multi-period observation and selection problems with an unknown number of applicants in which applicants are interviewed one at a time on each period, recall of applicants that were interviewed and rejected is not possible, the decision on each period to reject or accept an applicant is based on relative ranks, and the objective is to maximize the probability of accepting the top-ranked applicant. We propose and then assess the efficiency of three descriptive models by simulation, and then test them competitively in a computer-controlled experiment. A cutoff decision model, in which the first r−1 applicants are rejected and then the first applicant who is ranked higher than all previously observed applicants is accepted, outperforms the two other two models. Compared with the optimal policy, subjects stop the search too early. Their behavior is accounted for by a cutoff model that postulates an endogenous cost of search. Copyright

It's not really theft!: Personal and workplace ethics that enable software piracy

This study examines predictors of software piracy, a practice estimated to cost the software industry between

Batch queues with choice of arrivals: Equilibrium analysis and experimental study

4 and

Reinforcement-based adaptive learning in asymmetric two-person bargaining with incomplete information

12 billion in lost revenue annually. Correlates with software piracy were explored using responses from a university wide survey (n = 589). Forty-four percent of university employees reported having copies of pirated software (mean = 5.0 programmes), while thirty-one percent said they have made unauthorized copies (mean = 4.2 programmes). A structural model was developed based on (1) previous studies of software piracy, (2) consequential aspects of intellectual property, and (3) the theories of planned behaviour (Ajzen 1985), and reasoned action as applied to moral behaviour (Vallerand et al. 1992). This model indicates that social norms, expertise required, gender, and computer usage (both home and at work), all have direct effects on self-reported piracy. In addition, ease of theft, peoples sense of the proportional value of software, and various other demographic factors were found to ...

The information advantage in two-person bargaining with incomplete information

We study both theoretically and experimentally the decisions players make in two queueing games with batch service. In both games, players are asked to independently decide when to join a discrete-time queue to receive service, or they may simply choose not to join it at all. Equilibrium solutions in pure and mixed strategies are constructed for two games where balking is prohibited and where it is allowed. They are then tested experimentally in a study that varies the game type (balking vs. no balking) and information structure (private vs. public information) in a 2X2 between-subject design. With repeated iterations of the stage game, all four experimental conditions result in aggregate, but not individual, behavior approaching mixed-strategy equilibrium play.(This abstract was borrowed from another version of this item.)

Elicitation of Strategy Profiles in Large Group Coordination Games

The sealed bid k-double auction is a mechanism used to structure bilateral bargaining under two-sided incomplete information. This mechanism is tested in two experiments in which subjects are asked to bargain repeatedly for 50 rounds with the same partner under conditions of information disparity favoring either the buyer (Condition BA) or seller (Condition SA). Qualitatively, the observed bid and offer functions are in agreement with the Bayesian linear equilibrium solution (LES) constructed by Chatterjee and Samuelson (1983). A trader favored by the information disparity, whether buyer or seller, receives a larger share of the realized gain from trade than the other trader. Comparison with previous results reported by Daniel, Seale, and Rapoport (1998), who used randomly matched rather than fixed pairs, shows that when reputation effects are present this advantage is significantly enhanced. A reinforcement-based learning model captures the major features of the offer and bid functions, accounting for most of the variability in the round-to-round individual decisions. Copyright Kluwer Academic Publishers 1998

Analysis of heuristic solutions to the best choice problem

Abstract The sealed-bid k-double auction is a mechanism used to structure bilateral bargaining under two-sided incomplete information. In the process of testing whether or not the observed bid and ask functions are in agreement with the Bayesian linear equilibrium solution under asymmetric information conditions, we find a strong information disparity effect. The trader favored by the information disparity, whether buyer or seller, receives a significantly larger share of the realized gains from trade than that predicted by the theory. A reinforcement-based learning model is formulated and tested. It accounts successfully for most of the variability in the round-to-round individual decisions.

Using an Iterated Prisoner's Dilemma with Exit Option to Study Alliance Behavior: Results of a Tournament and Simulation

The strategy method is an experimental procedure for eliciting a complete strategy of play for all information sets, not only the ones that happen to be reached during the course of a play of a game. We use it to elicit individual strategy profiles for a class of large group, market entry games in which the payoff for a player who enters on a given market capacity value decreases linearly in the difference between the capacity value and the corresponding number of entrants. Our results show that the aggregate frequencies of entry do not differ from previous results obtained under the more common decision method. Under both methods, the number of entrants across a large set of market capacity values is organized remarkably well by the equilibrium solution. In contrast, theindividual profiles do not support mixed equilibrium play; only three of the sixty profiles suggest attempts at randomization or “mixing” between periods. About half of the individual profiles appear to converge, albeit slowly, to cutoff decision policies and more than a quarter of the profiles exhibit a variety of patterns that defy classification. Copyright Kluwer Academic Publishers 2000

Coordination in the Aggregate Without Common Knowledge or Outcome Information

Abstract In the sequential decision making task known as the best choice problem, n items are presented in a random order one at a time. After each item, the decision maker (DM) can determine only their relative ranks. The DM’s goal is to select the best of all n items without the possibility of recalling previously observed items. The purpose of this paper is to compare the optimal policy to three classes of heuristic decision rules that were identified and studied in previous research. We also investigate the limiting case as n →∞.