2021/01/14 by Emanuel Vespa, Vespa, Emanuel, Taylor Weidman +3
Decision Sciences · Social Sciences · #Decision-Making and Behavioral Economics #Experimental Behavioral Economics Studies #FOS: Economics and business #Game Theory and Applications #General Economics (econ.GN)
paper · pdf · doi:10.48550/arxiv.2101.05900
openalex publication_date 2021/01/14 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
In repeated-game applications where both the collusive and non-collusive\noutcomes can be supported as equilibria, researchers must resolve underlying\nselection questions if theory will be used to understand counterfactual\npolicies. One guide to selection, based on clear theoretical underpinnings, has\nshown promise in predicting when collusive outcomes will emerge in controlled\nrepeated-game experiments. In this paper we both expand upon and experimentally\ntest this model of selection, and its underlying mechanism: strategic\nuncertainty. Adding an additional source of strategic uncertainty (the number\nof players) to the more-standard payoff sources, we stress test the model. Our\nresults affirm the model as a tool for predicting when tacit collusion is\nlikely/unlikely to be successful. Extending the analysis, we corroborate the\nmechanism of the model. When we remove strategic uncertainty through an\nexplicit coordination device, the model no longer predicts the selected\nequilibrium.\n