Breitmoser, Yves and Bolle, Friedel and Otto, Philipp E. (2012): The core with random utility and interdependent preferences: Theory and experimental evidence.
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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|
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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]