Markets, games, & strategic behavior / Charles A. Holt.

Format:

Book

Author/Creator:

Holt, Charles A., 1948-

Contributor:

Alumni and Friends Memorial Book Fund.

Series:

Addison-Wesley series in economics

The Addison-Wesley series in economics

Language:

English

Subjects (All):

Economics--Study and teaching (Graduate)--Simulation methods.

Economics.

Markets.

Game theory.

Negotiation in business.

Economics--Psychological aspects.

Economics--Study and teaching (Graduate).

Simulation methods.

Physical Description:

xviii, 462, 79 pages : illustrations ; 24 cm.

Other Title:

Markets, games, and strategic behavior

Place of Publication:

Boston : Pearson Addison Wesley, [2007]

Summary:

Markets, Games, & Strategic Behavior combines a behavioral approach with active classroom learning exercises to stimulate student understanding of economic decisions and interactions in games and markets. Each chapter begins with a lead-off experiment designed to introduce students to economic concepts such as the Winner's Curse, Asset Market Bubbles, Rent Seeking, Signaling, Information Cascades, Fairness, and Reciprocity. Experiments are easy to incorporate into the classroom, and may be run "by hand" with the instructions provided or online with the Veconlab software.

With Markets, Games, & Strategic Behavior, you can: Get Off to the Right Start. The early chapters cover the basics, and reinforce the concepts with experiments that feature markets with many buyers and sellers, simple two-person games, and risky individual decisions. Choose by Chapter. Short self-contained chapters allow you to choose the order in which you cover topics like bargaining, auctions, games, and asymmetric information. Make it Accessible. Mathematical arguments are simple since experiments are typically based on specific cases that distinguish alternate theories. Find the Fit for Your Course. The book's scope and flexible format make it easy to integrate into a variety of undergraduate courses including intermediate microeconomics, game theory, and public economics.

Contents:

Part 1 Basic Concepts: Decisions, Game Theory, and Market Equilibrium 1

1.1 Origins 3

1.4 A Brief History of Experimental Economics 16

Chapter 2 A Pit Market 21

2.2 A Classroom Experiment 22

2.3 Chamberlin's Results and Vernon Smith's Reaction 27

2.4 Extensions 31

Chapter 3 Some Simple Games: Competition, Coordination, and Guessing 35

3.1 Game Theory and the Prisoner's Dilemma 35

3.2 A Prisoner's Dilemma Experiment 37

3.3 A Coordination Game 40

3.4 A Guessing Game 42

3.5 Extensions 44

Chapter 4 Risk and Decision Making 47

4.1 Who Wants to Be a Millionaire? 47

4.2 A Simple Lottery-Choice Experiment 50

4.3 Payoff Scale, Order, and Demographics Effects 54

4.4 Extensions 58

Chapter 5 Randomized Strategies 59

5.1 Symmetric Matching Pennies Games 59

5.2 Battle of the Sexes 63

5.3 Extensions 67

Part 2 Market Experiments 69

Chapter 6 Monopoly and Cournot Markets 71

6.1 Monopoly 71

6.2 Cournot Duopoly 75

6.3 Cournot Oligopoly 77

6.4 Extensions 80

Appendix Optional Quick Calculus Review 80

Chapter 7 Vertical Market Relationships 83

7.1 Double Marginalization 83

7.2 The Newsvendor Problem 87

7.3 The Bullwhip Effect 90

7.4 Extensions 92

Chapter 8 Market Institutions and Power 95

8.2 The Exercise of Seller Market Power without Explicit Collusion 99

8.3 Edgeworth Cycles and Random Prices 102

8.4 The Effects of Market Power 103

8.5 Extensions 107

Appendix Calculation of a Mixed-Strategy Equilibrium in Prices 107

Chapter 9 Collusion and Price Competition 111

9.1 Collusion in Posted-Offer Markets: "This Is Economics" 111

9.2 Collusion with Secret Discounts 114

9.3 Extensions: Cheap Talk, Mutual Forbearance, and the "V Word" 117

Chapter 10 Market Failure Due to Unraveling: Lemons and Matching Markets 123

10.1 Endogenous Product Quality 123

10.2 Clearinghouse Mechanisms and Unraveling in Labor Markets 127

10.3 Extensions: Baseball, Dorm Rooms, School Choice, Deep Space, Sorority Rush,...but Marriage? 131

Chapter 11 Asset Markets and Price Bubbles 133

11.1 Bubbles and Crashes 133

11.2 A Digression on Present Value 137

11.3 The Limit Order Market Experiment 138

11.4 Other Research on the Call Market Institution 141

Part 3 Bargaining and Behavioral Labor Economics 145

Chapter 12 Ultimatum Bargaining 147

12.1 Strategic Advantage and Ultimatums 147

12.2 Bargaining in the Bush 148

12.3 Bargaining in the Lab 151

12.4 Multi-Stage Bargaining 153

12.5 Extensions: "I Will Be Spending Years Trying to Figure Out What This All Meant" 156

Chapter 13 Trust, Reciprocity, and Principal-Agent Games 159

13.1 The Trust Game 159

13.2 A Labor Market Reciprocity Game 162

13.4 Extensions: Field Experiments 164

Part 4 Public Choice 167

Chapter 14 Voluntary Contributions 169

14.1 Social Norms and Public Goods 169

14.2 "Economists Free-Ride, Does Anyone Else?" 171

14.3 Single-Round Experiments 172

14.4 Multi-Round Experiments 176

14.5 Extensions 178

Chapter 15 The Volunteer's Dilemma 183

15.1 Sometimes It Only Takes One Hero 183

15.2 Initial Experimental Evidence 184

15.3 The Mixed-Strategy Equilibrium 186

15.4 An Experiment on Group Size Effects 189

15.5 Extensions 191

Chapter 16 Externalities, Congestion, and Common Pool Resources 193

16.1 Water 194

16.2 Ducks and Traffic 195

16.3 Fish 200

16.4 Extensions 202

Chapter 17 Rent Seeking 205

17.1 Government with "a Smokestack on Its Back" 205

17.2 Rent Seeking in the Classroom Laboratory 207

17.3 The Nash Equilibrium 208

17.4 Comparative Statics for Changes in Cost and the Number of Competitors 209

17.5 Extensions 210

Chapter 18 Voting and Politics Experiments 215

18.1 The Median Voter Theorem 215

18.2 Experimental Tests of Spatial Voting Models 217

18.3 Fairness and Deviations from Core Outcomes 220

18.4 Legislative Bargaining 221

18.5 Agendas and Strategic Voting 222

18.6 Polls, Runoffs, and Other Coordinating Devices 224

18.7 Participation Games 225

18.8 Field Experiments 227

18.9 Extensions 228

Part 5 Auctions 231

Chapter 19 Private Value Auctions 233

19.2 Auctions: Up, Down, and the "Little Magical Elf" 234

19.3 Bidding against a Uniform Distribution 237

19.4 Bidding Behavior in a Two-Person, First-Price Auction 240

19.5 Extensions 242

Appendix Risk Aversion 244

Chapter 20 The Takeover Game 247

20.1 Wall Street (the Film) 247

20.2 A Takeover Game Experiment 248

20.3 Quality Unraveling 250

20.4 Extensions: The Loser's Curse 252

Chapter 21 Common-Value Auctions and the Winner's Curse 255

21.1 "I Won the Auction but I Wish I Hadn't" 255

21.2 The Nash Equilibrium 258

21.3 The Winner's Curse 261

21.4 Extensions 262

Chapter 22 Multi-Unit and Combinatorial Auctions 265

22.1 Dry 2K 265

22.2 FCC Bandwidth Auctions and Package Bidding Alternatives 272

22.3 Experimental Tests of Package Bidding Alternatives 276

22.4 Extensions 278

Part 6 Behavioral Game Theory: Treasures and Intuitive Contradictions 281

Chapter 23 Multi-Stage Games 285

23.1 Extensive Forms and Strategies 285

23.2 Two-Stage Trust Games 288

23.3 The Centipede Game 291

23.4 Extensions 292

Chapter 24 Generalized Matching Pennies 295

24.1 The Case of Balanced Payoffs 295

24.2 Noisy Best Responses 296

24.3 The Effects of Payoff Imbalances 299

24.4 Probabilistic Choice 302

24.5 Extensions 304

Chapter 25 The Traveler's Dilemma 307

25.1 A Vacation with an Unhappy Ending? 307

25.2 Data 309

25.3 Learning and Experience 310

25.4 Iterated Rationality and Quantal Response Equilibrium 312

25.5 Extensions 316

Appendix Bounded Rationality in the Traveler's Dilemma-A Spreadsheet-Based Analysis 318

Chapter 26 Coordination Games 325

26.1 "The Minimum Effort Game? That's One I Can Play!" 325

26.2 Nash Equilibria, Numbers Effects, and Experimental Evidence 328

26.3 Effort-Cost Effects 329

26.4 Equilibrium with Noisy Behavior 331

26.5 Extensions 333

Appendix An Analysis of Noisy Behavior in the Coordination Game 334

Part 7 Individual Decision Experiments 339

Chapter 27 Probability Matching 341

27.1 Being Treated Like a Rat 341

27.2 Are Rats Really More Rational Than Humans? 342

27.3 Siegel and Goldstein's Experiments 343

27.4 A Simple Model of Belief Learning 345

27.5 Reinforcement Learning 346

27.6 Extensions 347

Chapter 28 Lottery Choice Anomalies 351

28.2 The Allais Paradox 352

28.3 Prospect Theory: Probability Misperception 354

28.4 Prospect Theory: Gains, Losses, and "Reflection Effects" 356

28.5 Extensions 359

Chapter 29 ISO (in Search of...) 361

29.2 Search from a Uniform Distribution 362

29.3 Experimental Data 363

29.4 Optimal Search 364

29.5 Extensions 366

Part 8 Information, Learning, and Signaling 369

Chapter 30 Bayes' Rule 371

30.2 A Simple Example and a Counting Heuristic 373

30.3 Relating the Counting Heuristic to Bayes' Rule 376

30.4 Experimental Results 378

30.5 Bayes' Rule with Elicited Probabilities 379

30.6 A Follow-Up Experiment with a Rare Event 382

30.7 Extensions 383

Appendix Truthful Elicitation 384

Chapter 31 Information Cascades 389

31.1 "To Do Exactly as Your Neighbors Do Is the Only Sensible Rule" 389

31.2 A Model of Rational Learning from Others' Decisions 390

31.3 Experimental Evidence 392

31.4 Extensions 395

Chapter 32 Statistical Discrimination 397

32.1 "Brown-Eyed People Are More Civilized" 397

32.2 Being Purple or Green 399

32.3 Data on Statistical Discrimination 401

32.4 "Are Emily and Greg More Employable than Lakisha and Jamal?" 405

32.5 Extensions 406

Appendix Derivation of the Discriminatory Equilibrium 407

Chapter 33 Signaling Games 409

33.1 Real Men

Don't Eat Quiche 409

33.2 Separating Equilibria 410

33.3 Pooling 412

33.4 Unintuitive Beliefs and Reverse Type Dependence 413

33.5 "Stripped Down Poker" 416

33.6 Extensions: "Too Cool for School" 419

Chapter 34 Prediction Markets 423

34.1 The Rationale for Prediction Markets 423

34.2 The Success of Political Event Markets 426

34.3 Information Aggregation and "Common Value Trading" 428

34.4 Extensions 431.

Notes:

Includes bibliographical references (pages 433-450) and index.

Local Notes:

Acquired for the Penn Libraries with assistance from the Alumni and Friends Memorial Book Fund.

ISBN:

0321419316

9780321419316

OCLC:

70129139