Wooyoung Lim

Contests with a stochastic number of players

We study Tullocks (1980) n-player contest when each player has an independent probability 0 2 individual equilibrium spending as a function of p is single-peaked and satisfies a single-crossing property for any two different numbers of potential players. However, total equilibrium spending is monotonically increasing in p and n. We also demonstrate that ex-post over-dissipation is a feature of the pure-strategy equilibrium in our model. It turns out that if the contest designer can strategically decide whether to reveal the actual number of participating players or not, then the actual number of participants is always revealed.

An experimental analysis of multidimensional cheap talk

We design experimental games that capture the logic of Battaglinis (2002) construction of fully revealing equilibrium in multidimensional cheap talk. Two senders transmit information to a receiver over a 2×2 state space. Despite overall misaligned interests, full revelation is achieved in equilibrium by having the senders truthfully reveal along distinct dimensions. Our experimental findings confirm that more information can be extracted with two senders in a multidimensional setting. The extent to which information is transmitted depends on whether dimensional interests are aligned between a sender and the receiver, the sizes of the message spaces, and the specification of out-of-equilibrium beliefs. While inducing interest alignment on the relevant dimensions and restricting the message spaces facilitated equilibrium play and information transmission, having a fully revealing equilibrium that is supported by implausible beliefs reduced the instances in which the equilibrium was played.

Authority and communication in the laboratory

We report findings from experiments on two delegation–communication games. An uninformed principal chooses whether to fully delegate her decision-making authority to an informed agent or to retain the authority and communicate with the agent via cheap talk to obtain decision-relevant information. In the game in which the delegation outcome is payoff-dominated by both the truthful and the babbling communication outcomes, we find that principal-subjects almost always retain their authority and agent-subjects communicate truthfully. Significantly more choices of delegation than of communication are observed in another game in which the delegation outcome payoff-dominates the unique babbling communication outcome; yet there is a non-negligible fraction of principal-subjects who holds on to their authority and agent-subjects who transmits some information. A level-k analysis of the game indicates that a principal-subject “under-delegates” due to the belief that her less-than-fully-strategic opponent will provide information; such belief is in turn consistent with the actual play.

An experimental investigation of stochastic adjustment dynamics

This paper describes an experiment designed to test which, if any, stochastic adjustment dynamic most accurately captures the behaviour of a large population. The setting is a large population coordination game, the Language Game of Neary (2012), in which actions are strategic complements and two homogeneous groups have differing preferences over equilibria. We find that subject behaviour is highly consistent with the myopic best-response learning rule with deviations from this rule that are (i) dependent on the myopic best-response payoff but not on the deviation payoff, and (ii) directed in the sense of being group-dependent. We also find a time trend to deviations, with the magnitude tapering off as time progresses. This is in contrast to much of the theoretical literature that supposes a variety of other specifications of learning rules and both time-independent and payoff-dependent explanations for deviations.

Eliciting Private Information with Noise: The Case of Randomized Response

The paper formalizes Warner’s (1965) randomized response technique (RRT) as a game and implements it experimentally, thus linking game theoretic approaches to randomness in communication with survey practice in the field and a novel implementation in the lab. As predicted by our model and in line with Warner, the frequency of truthful responses is significantly higher with randomization than without. The model predicts that randomization weakly improves information elicitation, as measured in terms of mutual information, although, surprisingly, not always by RRT inducing truth-telling. Contrary to this prediction, randomization significantly reduces the elicited information in our experiment.

Conventional Contracts, Intentional behavior and Logit Choice: Equality Without Symmetry

When coordination games are played under the logit choice rule and there is intentional bias in agents’ non-best response behavior, the Egalitarian bargaining solution emerges as the long run social norm. Without intentional bias, a new solution, the Logit bargaining solution emerges as the long run norm. These results contrast with results under non-payoff dependent deviations from best response behavior, where it has previously been shown that the Kalai-Smorodinsky and Nash bargaining solutions emerge as long run norms. Experiments on human subjects suggest that non-best response play is payoff dependent and displays intentional bias. This suggests the Egalitarian solution as the most likely candidate for a long run bargaining norm.

Communication in bargaining over decision rights

This paper develops a model of bargaining over decision rights between an uninformed principal and an informed but self-interested agent. We introduce two different bargaining mechanisms: tacit and explicit bargaining. In tacit bargaining, an uninformed principal makes a take-it-or-leave-it price offer to the agent, who then decides whether to accept or reject the offer. In the equilibrium of the game, the principal inefficiently screens out some agent types so that the agents private information cannot be fully utilized when the decision is made. In explicit bargaining in which parties can communicate explicitly via cheap talk before tacit bargaining, however, an equilibrium with no such inefficient screening exists even when the conflict of interest is arbitrarily large. We also follow a mechanism design approach, showing that under certain conditions, explicit bargaining is an optimal bargaining mechanism that maximizes the joint surplus of the parties.

Conventional Contracts, Intentional Behavior and Logit Choice: Equality Without Symmetry

When coordination games are played under the logit choice rule and there is intentional bias in agents’ non-best response behavior, the Egalitarian bargaining solution emerges as the long run social norm. Without intentional bias, a new solution, the Logit bargaining solution emerges as the long run norm. These results contrast with results under non-payoff dependent deviations from best response behavior, where it has previously been shown that the Kalai-Smorodinsky and Nash bargaining solutions emerge as long run norms. Experiments on human subjects suggest that non-best response play is payoff dependent and displays intentional bias. This suggests the Egalitarian solution as the most likely candidate for a long run bargaining norm.