The focal point in the Traveller’s Dilemma: An Experimental Study

Morone, Andrea and Morone, Piergiuseppe (2014): The focal point in the Traveller’s Dilemma: An Experimental Study.

Abstract

This paper provides an experimental test of the traveller’s dilemma. Our investigation aims to address the research hypothesis that introducing a reference point à la Schelling (set equal to the Pareto optimal solution) might drive people away from rationality even when the size of the penalty/reward is high. Experimental findings reported in this paper provide answers to this question showing that the reference point did not encourage coordination around the Pareto optimal choice.

• Item Type: MPRA Paper
• Language: English
• Keywords: traveller’s dilemma; focal point; individual decision
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments; D - Microeconomics > D7 - Analysis of Collective Decision-Making

References

Basu, K. (1994). “The Traveler’s Dilemma: Paradoxes of Rationality in Game Theory”, American Economic Review, 84(2), 391-395.

Basu, K., L. Becchetti and L. Stanca (2011). “Experiments with the traveler's dilemma: welfare, strategic choice and implicit collusion”, Social choice and welfare, 37: 575-595.

Becker, T., M. Carter and J. Naeve (2005). “Experts playing the traveler’s dilemma” Department of Economics – working paper Nr. 252/2005, University of Hohenheim, Germany.

Bosman, R., and F. van Winden (2002). “Emotional Hazard in a Power-to- Take experiment”, Economic Journal, 112: 147-169.

Bosman, R., M. Sutter and F. van Winden (2005). “The impact of real effort and emotions in the power-to-take game”, Journal of Economic Psychology, 26: 407-429.

Brañas-Garza, P., M.P. Espinosa, P. Rey-Biel (2011). “Travelers’ types”, Journal of Economic Behavior and Organization, 78: 25–36.

Capra, C.M., J.K. Goeree, R. Gmez and C.A. Holt (1999). “Anomalous behavior in a traveler’s dilemma?” American Economic Review, 89(3): 678-690.

Cherry, T.L., P. Frykblom and J.F. Shogren (2002). “Hardnose the Dictator.” American Economic Review, 92:1218-21.

Chakravarty, S., E. Dechenaux and J. Roy (2010). “Ill-defined versus Precise Pre-play Communication in the Traveler's Dilemma”, Southern Economic Journal, 77(2): 351-368.

Guth, W., and A. Ortmam (2006). “A behavioral approach to distribution and bargaining”, in: Handbook of contemporary behavioral economics: foundations and developments, M. Altman (ed.), Armonk, New York.

Fischbacher, U. (2007). “z-Tree: Zurich toolbox for ready-made economic experiments” Experimental Economics, 10: 171-178 Keynes, J.M. (1936). The General Theory of Employment, Interest and Money, New York: Harcourt Brace and Co.

Morone, A. and P. Morone (2008). “Guessing Games and People Behaviours: What Can we Learn?”, in: M. Abdellaboui and J.D. Hey (eds.), Advances in Decision Making under Risk and Uncertainty, Springer.

Morone, A. and P. Morone (2010). “Boundary and interior equilibria: what drives convergence in a p-beauty contest?”, Economics Bulletin, 30(3): 2097-2106.

Morone, A., S. Sandri and T. Uske (2008), “On the absorbability of the Guessing Game Theory - A Theoretical and Experimental Analysis”, in: A. Innocenti and P. Sbriglia (eds.), Games, Rationality and Behaviour, Palgrave.

Morone, A., and P. Morone (2014), “Individual and group behaviour in the traveler's dilemma: An experimental study”, Journal of Behavioral and Experimental Economics, 1(49): 1-7.

Moulin, H. (1986) Game Theory for the Social Sciences (2nd ed.). New York: NYU Press.

Nagel, R. (1995). “Unraveling in Guessing Games: An Experimental Study”, American Economic Review, 85(5): 1313-1326.

Rubinstein A. (2006). “Dilemmas of an economic theorist.” Econometrica, 74: 865-884

Schelling, T.C. (1980). The strategy of conflict, Cambridge: Harvard University Press.