J. Todd Swarthout

Do we detect and exploit mixed strategy play by opponents

Abstract.We conducted an experiment in which each subject repeatedly played a game with a unique Nash equilibrium in mixed strategies against some computer-implemented mixed strategy. The results indicate subjects are successful at detecting and exploiting deviations from Nash equilibrium. However, there is heterogeneity in subject behavior and performance. We present a one variable model of dynamic random belief formation which rationalizes observed heterogeneity and other features of the data.

EconPort: Creating and Maintaining a Knowledge Commons

The paper presents an example of the blurring of the boundaries and stakeholders in the knowledge commons. The authors describe a digital library that they built as a teaching facility, independently of the universitys library. At center stage is EconPort, an open access digital library for students, instructors, and researchers in economics, in essence, a new knowledge commons. The authors describe the content of EconPort and the educational philosophy that underlies its creation. From an economists perspective, they present a case study of the incentives, risks, and possible negative externalities of creating and maintaining a locally-based, discipline-focused digital library and virtual experimental laboratory. They also discuss issues of preservation of such an individualized resource.

Insurance Purchase for Low-Probability Losses

It is widely accepted that individuals tend to underinsure against low-probability, high-loss events relative to high-probability, low-loss events. This conventional wisdom is based largely on field studies, as there is very little experimental evidence. We reexamine this issue with an experiment that accounts for possible confounds in prior insurance experiments. Our results are counter to the prior experimental evidence, as we observe subjects buying more insurance for low-probability events than the higher-probability events, given a constant expected loss and load factor. Our results suggest that, to the extent underinsurance for catastrophic risk is observed in the field, it can be attributed to factors other than the relative probability of the loss events.

Auctioning the Right to Play Ultimatum Games and the Impact on Equilibrium Selection

We auction scarce rights to play the Proposer and Responder positions in ultimatum games. As a control treatment, we randomly allocate these rights and charge exogenous participation fees. These participation fee sequences match the auction price sequence from a session of the original treatment. With endogenous selection via auctions, we find that play converges to a session-specific Nash equilibrium, and auction prices emerge supporting this equilibrium by the principle of forward induction. With random assignment, we find play also converges to a session-specific Nash equilibrium as predicted by the principle of loss avoidance. While Nash equilibria with low offers are observed, the subgame perfect Nash equilibrium never is.