Vital Anderhub

An Experimental Study of the Repeated Trust Game with Incomplete Information

In the trust game first player 1 decides between non-cooperation or trust in reciprocity and then, in the latter case, player 2 between exploiting player 1 or rewarding him. In our experiment, player 2 can be a notorically rewarding player (this type is implemented as a robot strategy) or a human participant who may decide opportunistically. To allow for reputation formation, this game is played repeatedly. Learning can be analysed since participants play successively several repeated games with changed partners. In our computerized experiment, participants can explicitly rely on mixed strategies which allows testing the qualitative and quantitative aspects of reputation equilibria also at an individual level.

Capacity Choices and Price Competition in Experimental Markets

We report on experimental duopoly markets with heterogeneous goods. In these markets, sellers first choose capacities and then prices. While capacities remain fixed for either five or ten periods, prices have to be chosen in every period. The experiments starts with two sets of exogenously predetermined capacities. Independently of the distribution of capacities is, a unique pure-strategy in prices is subgame perfect. In equilibrium, capacities should correspond to the Cournot prediction. Given capacities, price-setting behavior is in general consistent with the theory. Average capacities converge above the Cournot level. Capacities converge at the industry level but are somewhat dispersed. Sellers rarely manage to cooperate.

An Experimental Study of Saving and Investing in a Complex Stochastic Environment

Optimal intertemporal decision making in a stochastic environment requires considerable analytical skills. Boundedly rational decision makers typically fail in achieving the best outcome. Thus, experimental studies of intertemporal decision making (see the selective survey1 of Anderhub and Guth, 1999) may offer stylized facts which can guide our intuition about how boundedly rational decision makers generate choices.

On Saving and Investing

Establish an emergency savings fund Add to the balance of an emergency savings fund Make savings automatic each month Calculate my net worth at least once a year Estimate retirement income needs Compare retirement income needs with anticipated retirement income Increase amounts being contributed to retirement accounts Track spending to find money that can be saved or invested Check that my investment advisors or those I interview are registered to do business in the state and are in good standing Identify investment advisors who will help me reach my financial goals Diversify investments to reduce risk Identify the risks and rewards of different investments Ask my employer if they offer a retirement savings match and how it works Take advantage of the full retirement savings match offered through my employer Review my investments yearly to see if they need to be rebalanced Establish or add to a college savings fund Read and study class materials Other Other