Focality is intuitive - Experimental evidence on the effects of time pressure in coordination games

Sonntag, Axel and Poulsen, Anders (2019): Focality is intuitive - Experimental evidence on the effects of time pressure in coordination games.

Abstract

We experimentally examine the effects of varying time pressure in a coordination game with a label salient focal equilibrium. We consider both a pure coordination game (payoff symmetry) and a battle of the sexes game with conflict of interest (payoff asymmetry). In symmetric games, there are no effects of time pressure, since the label-salient outcome is highly focal regardless of how much time subjects have to decide. In asymmetric games, less time results in greater focality of the the label-salient action, and it becomes significantly more likely that any coordination is on the focal outcome.

• Item Type: MPRA Paper
• Language: English
• Keywords: coordination game; focal point; time pressure; response times; social heuristics hypothesis; experiment
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior

References

Michael Bacharach. Beyond individual choice: teams and frames in game theory. Princeton University Press, 2006.

Nicholas Bardsley, Judith Mehta, Chris Starmer, and Robert Sugden. Explaining focal points : Cognitive hierarchy theory versus team reasoning. The Economic Journal, 120:40–79, 2009. doi: 10.1111/j.1468-0297.2009.02304.x.

Hasida Ben Zur and Shlomo J. Breznitz. The effect of time pressure on risky choice behavior. Acta Psychologica, 47:89–104, 1981. ISSN 00016918. doi: 10.1016/0001-6918(81)90001-9.

Zoë Bett, Anders Poulsen, and Odile Poulsen. The focality of dominated compromises in tacit coordination situations: Experimental evidence. Journal of Behavioral and Experimental Economics, 60:29–34, 2016. ISSN 22148051. doi: 10.1016/j.socec.2015.11.004.

Andreas Blume and Uri Gneezy. An experimental investigation of optimal learning in coordination games. Journal of Economic Theory, 172, 2000.

Andreas Blume and Uri Gneezy. Cognitive forward induction and coordination without common knowledge: An experimental study. Games and Economic Behavior, 68:488–511, 2010. ISSN 08998256. doi: 10.1016/j.geb.2009.07.011.

Pablo Bra˜nas Garza, Debrah Meloso, and Luis Miller. Strategic risk and response time across games. International Journal of Game Theory, 46(2):511–523, 2017.

Magdalena Buckert, Jörg Oechsler, and Christiane Schwieren. Imitation under stress. WZB Discussion Papers, 309, 2014.

Alexander W Cappelen, Ulrick H Nielsen, Bertil Tungodden, Jean-Robert Tyran, and Erik Wengstrom. Fairness is intuitive. Experimental Economics, 2015. ISSN 1386-4157. doi: 10.1007/s10683-015-9463-y.

Dominique Cappelletti, Werner Güth, and Matteo Ploner. Being of two minds: Ultimatum offers under cognitive constraints. Journal of Economic Psychology, 32:940–950, 12 2011. ISSN 01674870. doi: 10.1016/j.joep.2011.08.001.

Peter JD Carnevale and Edward J Lawler. Time pressure and the development of integrative agreements in bilateral negotiations. Journal of Conflict Resolution, 30(4):636–659, 1986.

Daniel L Chen, Martin Schonger, and Chris Wickens. otree—an open-source platform for laboratory, online, and field experiments. Journal of Behavioral and Experimental Finance, 9:88–97, 2016.

Vincent P Crawford, Uri Gneezy, and Yuval Rottenstreich. The power of focal points is limited: Even minute payoff asymmetry may yield large coordination failures. American Economic Review, 98(4):1443–58, 2008.

Giovanna Devetag and Andreas Ortmann. When and why? a critical survey on coordination failure in the laboratory. Experimental economics, 10(3):331–344, 2007.

Felix Døssing, Marco Piovesan, Erik Wengström, et al. Cognitive load and cooperation. Review of Behavioral Economics, 4(1):69–81, 2017.

Anthony M Evans, Kyle D Dillon, and David G Rand. Fast but not intuitive, slow but not reflective: Decision conflict drives reaction times in social dilemmas. Journal of Experimental Psychology: General, 144(5):951, 2015.

Shane Frederick. Cognitive reflection and decision making. Journal of Economic Perspectives, 19:25–42, 2005. ISSN 0895-3309. doi: 10.1257/089533005775196732.

Fabio Galeotti, Maria Montero, and Anders Poulsen. Efficiency versus equality in bargaining. Working Paper, 2015.

Andrea Isoni, Anders Poulsen, Robert Sugden, and Kei Tsutsui. Focal points in tacit bargaining problems: Experimental evidence. European Economic Review, 59:167–188, 2013.

Andrea Isoni, Anders Poulsen, Robert Sugden, and Kei Tsutsui. Efficiency, equality, and labeling: An experimental investigation of focal points in explicit bargaining. American Economic Review, 104(10):3256–87, 2014.

Martin G Kocher and Matthias Sutter. Time is money—time pressure, incentives, and the quality of decision-making. Journal of Economic Behavior and Organization, 61(3):375–392, 2006.

Martin G Kocher, Julius Pahlke, and Stefan T Trautmann. Tempus fugit: time pressure in risky decisions. Management Science, 59(10):2380–2391, 2013.

Ian Krajbich, Björn Bartling, Todd Hare, and Ernst Fehr. Rethinking fast and slow based on a critique of reaction-time reverse inference. Nature communications, 6:7455, 2015.

David Lewis. Convention: a philosophical study. Cambridge, Harvard university press, 1969.

Florian Lindner and Matthias Sutter. Level-k reasoning and time pressure in the 11-20 money request game. Economics Letters, 120:542–545, 2013. ISSN 01651765. doi: 10.1016/j.econlet.2013.06.005.

Johannes Lohse. Smart or selfish–when smart guys finish nice. Journal of Behavioral and Experimental Economics, 64:28–40, 2016.

Gianna Lotito, Matteo Migheli, and Guido Ortona. Is cooperation instinctive? evidence from the response times in a public goods game. Journal of Bioeconomics, 15(2):123–133, 2013.

Sebastian Lotz. Spontaneous giving under structural inequality: Intuition promotescooperationinasymmetricsocialdilemmas. PLoSOne, 10(7):e0131562, 2015.

Judith Mehta, Chris Starmer, and Robert Sugden. The nature of salience: An experimental investigation of pure coordination games. The American Economic Review, 84:658–673, 1994.

Lisa Ordonez and Lehman Benson III. Decisions under time pressure: How time constraint affects risky decision making. Organizational Behavior and Human Decision Processes, 71(2):121–140, 1997.

Melanie Parravano and Odile Poulsen. Stake size and the power of focal points in coordination games: Experimental evidence. Games and Economic Behavior, 94:191–199, 2015.

John W Payne, James R Bettman, and Mary Frances Luce. When time is money: Decision behavior under opportunity-cost time pressure. Organizational behavior and human decision processes, 66(2):131–152, 1996.

Marco Piovesan and Erik Wengström. Fast or fair? a study of response times. Economics Letters, 105(2):193–196, 2009.

Anders Poulsen, Odile Poulsen, and Kei Tsutsui. Complexity and power of focal points in coordination games: Experimental evidence. Working paper, 2016.

Caterina Primi, Kinga Morsanyi, Francesca Chiesi, Maria Anna Donati, and Jayne Hamilton. The development and testing of a new version of the cognitive reflection test applying item response theory (irt). Journal of Behavioral Decision Making, 29(5):453–469, 2016.

DavidGRand. Cooperation, fastandslow: Meta-analytic evidence for a theory of social heuristics and self-interested deliberation. Psychological Science, 27 (9):1192–1206, 2016.

David G Rand, Joshua D Greene, and Martin A Nowak. Spontaneous giving and calculated greed. Nature, 489:427–430, 2012. ISSN 0028-0836. doi: 10.1038/nature11467.

David G Rand, Alexander Peysakhovich, Gordon T Kraft-Todd, George E Newman, Owen Wurzbacher, Martin A Nowak, and Joshua D Greene. Social heuristics shape intuitive cooperation. Nature communications, 5:3677, 2014.

John C Raven. Standardization of progressive matrices, 1938. British Journal of Medical Psychology, 19(1):137–150, 1941.

Howard G Rothstein. The effects of time pressure on judgment in multiple cue probability learning. Organizational Behavior and Human Decision Processes, 37 (1):83–92, 1986.

Ariel Rubinstein. Instinctive and congnitive reasoning: a study of response times. The Economic Journal, 117:1243–1259, 2007.

Thomas Schelling. The strategy of conflict. Harvard University Press, 1960.

Leonidas Spiliopoulos and Andreas Ortmann. The bcd of response time analysis in experimental economics. Experimental economics, 21(2):383–433, 2018.

Robert Sugden. The logic of team reasoning. Philosophical explorations, 6(3): 165–181, 2003.

Robert Sugden. Salience, inductive reasoning and the emergence of conventions. Journal of Economic Behavior and Organization, 79(1-2):35–47, 2011.

Robert Sugden and Ignacio E Zamarrón. Finding the key: the riddle of focal points. Journal of Economic Psychology, 27(5):609–621, 2006.

Matthias Sutter, Martin G Kocher, and Sabine Strauß. Bargaining under time pressure in an experimental ultimatum game. Economics Letters, 81:341–347, 2003. ISSN 01651765. doi: 10.1016/S0165-1765(03)00215-5.

Gustav Tinghög, David Andersson, Caroline Bonn, Harald Böttiger, Camilla Josephson, Gustaf Lundgren, Daniel Västfjäll, Michael Kirchler, and Magnus Johannesson. Intuition and cooperation reconsidered. Nature, 498:E1–E2, 2013. ISSN 0028-0836. doi: 10.1038/nature12194.

John B Van Huyck, Ann B Gillette, and Raymond C Battalio. Credible assignments in coordination games. Games and Economic Behavior, 4:606–626, 1992.

John B Van Huyck, Raymond C Battalio, and Frederick W Rankin. On the origin of convention: Evidence from coordination games. The Economic Journal, 107(442):576–596, 1997.

Dan Zakay and Stuart Wooler. Time pressure, training and decision effectiveness. Ergonomics, 27(3):273–284, 1984