Breitmoser, Yves and Bolle, Friedel and Otto, Philipp E. (2012): The core with random utility and interdependent preferences: Theory and experimental evidence.
This is the latest version of this item.
Download (5MB) | Preview
Experimental analyses of Shapley-Shubik assignment games revealed that the core prediction is biased. The competing hypotheses are that subjects either have interdependent preferences or a limited understanding of outcomes in alternative matches. To evaluate these hypotheses econometrically, we introduce core concepts with random utility perturbations. The 'logit core' converges to a uniform distribution on the original core as noise disappears. With noise, it captures the non-uniform distribution of observations inside and outside the core, and contrary to regression, it predicts robustly out-of-sample. The logit core thus constitutes a conceptual basis for econometric analyses of assignment problems, and by capturing the whole distribution of outcomes, it allows us to extract all information by maximum likelihood methods. Using this approach, we then show that the core's prediction bias results from overstating the subjects' grasp of outcomes in alternative matches, while social preferences are only of minor relevance.
|Item Type:||MPRA Paper|
|Original Title:||The core with random utility and interdependent preferences: Theory and experimental evidence|
|Keywords:||cooperative game, core, random utility, social preferences, laboratory experiment, descriptive adequacy, predictive adequacy|
|Subjects:||C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C90 - General
D - Microeconomics > D6 - Welfare Economics > D64 - Altruism; Philanthropy
|Depositing User:||Yves Breitmoser|
|Date Deposited:||24. Nov 2012 17:49|
|Last Modified:||16. Feb 2013 18:28|
Berl, J., McKelvey, R., Ordeshook, P., and Winer, M. (1976). An experimental test of the core in a simple n-person cooperative nonsidepayment game. Journal of Conflict Resolution, 20(3):453–479.
Burman, P. (1989). A comparative study of ordinary cross-validation, v-fold cross-validation and the repeated learning-testing methods. Biometrika, 76(3):503.
Camerer, C. (2003). Behavioral game theory: Experiments in strategic interaction. Princeton, NJ: Princeton University Press.
Camerer, C., Ho, T., and Chong, J. (2004). A cognitive hierarchy model of games. Quarterly Journal of Economics, 119(3):861–898.
Chen, Y. and Sönmez, T. (2002). Improving efficiency of on-campus housing: An experimental study. American Economic Review, 92(5):1669–1686.
Chen, Y. and Sönmez, T. (2006). School choice: an experimental study. Journal of Economic Theory, 127(1):202–231.
Costa-Gomes, M., Crawford, V., and Iriberri, N. (2009). Comparing models of strategic thinking in Van Huyck, Battalio, and Beil’s coordination games. Journal of the European Economic Association, 7(2-3):365–376.
Crawford, V. and Knoer, E. (1981). Job matching with heterogeneous firms and workers. Econometrica, 49(2):437–50.
Driessen, T. (1998). A note on the inclusion of the kernel in the core of the bilateral assignment game. International Journal of Game Theory, 27(2):301–303.
Eavey, C. and Miller, G. (1984). Fairness in majority rule games with a core. American Journal of Political Science, pages 570–586.
Fiorina, M. and Plott, C. (1978). Committee decisions under majority rule: An experimental study. The American Political Science Review, pages 575–598.
Goeree, J. and Holt, C. (1999). Stochastic game theory: for playing games, not just for doing theory. Proc Natl Acad Sci US A, 96(19):10564–10567.
Halaburda, H. (2010). Unravelling in two-sided matching markets and similarity of preferences. Games and Economic Behavior, 69(2):365–393.
Hamers, H., Klijn, F., Solymosi, T., Tijs, S., and Pere Villar, J. (2002). Assignment games satisfy the coma-property. Games and Economic Behavior, 38(2):231–239.
Hey, J. (1998). An application of Selten’s measure of predictive success. Mathematical Social Sciences, 35(1):1–15.
Hey, J., Lotito, G., and Maffioletti, A. (2010). The descriptive and predictive adequacy of theories of decision making under uncertainty/ambiguity. Journal of risk and uncertainty, 41(2):81–111.
Kagel, J. and Roth, A. (2000). The dynamics of reorganization in matching markets: A laboratory experiment motivated by a natural experiments. Quarterly Journal of Economics, 115(1):201–235.
Keane, M. and Wolpin, K. (2007). Exploring the usefulness of a nonrandom holdout sample for model validation: Welfare effects on female behavior. International Economic Review, 48(4):1351–1378.
Kelso Jr, A. and Crawford, V. (1982). Job matching, coalition formation, and gross substitutes. Econometrica, 50(6):1483–1504.
Koopmans, T. and Beckmann, M. (1957). Assignment problems and the location of economic activities. Econometrica, 25(1):53–76.
McKelvey, R. and Ordeshook, P. (1981). Experiments on the core: Some disconcerting results for majority rule voting games. Journal of Conflict Resolution, pages 709–724.
McKelvey, R. and Palfrey, T. (1995). Quantal response equilibria for normal form games. Games and Economic Behavior, 10(1):6–38.
Nalbantian, H. and Schotter, A. (1995). Matching and efficiency in the baseball free-agent system: An experimental examination. Journal of Labor Economics, 13(1):1–31.
Núñez, M. and Rafels, C. (2003). The assignment game: the τ-value. International Journal of Game Theory, 31(3):411–422.
Olson, M. and Porter, D. (1994). An experimental examination into the design of decentralized methods to solve the assignment problem with and without money. Economic Theory, 4(1):11–40.
Otto, P. and Bolle, F. (2011). Matching markets with price bargaining. Experimental Economics, 14(3):322–348.
Pais, J. and Pintér, Á. (2008). School choice and information: An experimental study on matching mechanisms. Games and Economic Behavior, 64(1):303–328.
Pérez-Castrillo, D. and Sotomayor, M. (2002). A simple selling and buying procedure. Journal of Economic Theory, 103(2):461–474.
Quint, T. (1991a). Characterization of cores of assignment games. International Journal of Game Theory, 19(4):413–420.
Quint, T. (1991b). The core of an m-sided assignment game. Games and Economic Behavior, 3(4):487–503.
Quint, T. (1996). On one-sided versus two-sided matching games. Games and Economic Behavior, 16(1):124–134.
Roth, A. (1985). Common and conflicting interests in two-sided matching markets. European Economic Review, 27(1):75–96.
Selten, R. (1972). Equal share analysis of characteristic function experiments. In Sauermann, H., editor, Contributions to Experimental Economics (Beiträge Zur Experimentellen Wirtschaftsforschung), pages 130–165. Mohr Siebeck.
Selten, R. (1991). Properties of a measure of predictive success. Mathematical Social Sciences, 21(2):153–167.
Shapley, L. and Shubik, M. (1972). The assignment game i: The core. International Journal of Game Theory, 1(1):111–130.
Solymosi, T. and Raghavan, T. (2001). Assignment games with stable core. International Journal of Game Theory, 30(2):177–185.
Sotomayor, M. (1999). The lattice structure of the set of stable outcomes of the multiple partners assignment game. International Journal of Game Theory, 28(4):567–583.
Stahl, D. and Wilson, P. (1995). On players’ models of other players: Theory and experimental evidence. Games and Economic Behavior, 10(1):218–254.
Tenbrunsel, A., Wade-Benzoni, K., Moag, J., and Bazerman, M. (1999). The negotiation matching process: Relationships and partner selection. Organizational Behavior and Human Decision Processes, 80(3):252–283.
Toda, M. (2005). Axiomatization of the core of assignment games. Games and Economic Behavior, 53(2):248–261.
Turocy, T. (2005). A dynamic homotopy interpretation of the logistic quantal response equilibrium correspondence. Games and Economic Behavior, 51(2):243–263.
Vuong, Q. (1989). Likelihood ratio tests for model selection and non-nested hypotheses. Econometrica, 57(2):307–333.
Weizsäcker, G. (2003). Ignoring the rationality of others: evidence from experimental normal-form games. Games and Economic Behavior, 44(1):145–171.
Wilcox, N. (2008). Stochastic models for binary discrete choice under risk: A critical primer and econometric comparison. Risk aversion in experiments, 12:197–292.
Wilcox, N. (2011). Stochastically more risk averse: A contextual theory of stochastic discrete choice under risk. Journal of Econometrics, 162(1):89–104.
Zhang, P. (1993). Model selection via multifold cross validation. The Annals of Statistics, 21(1):299–313.
Available Versions of this Item
A positive theory of cooperative games: The logit core and its variants. (deposited 20. Aug 2011 16:55)
- The core with random utility and interdependent preferences: Theory and experimental evidence. (deposited 24. Nov 2012 17:49) [Currently Displayed]