Article records
https://feeds.library.caltech.edu/people/Palfrey-T-R/article.rss
A Caltech Library Repository Feedhttp://www.rssboard.org/rss-specificationpython-feedgenenSat, 13 Apr 2024 00:02:12 +0000Multiple-Object, Discriminatory Auctions with Bidding Constraints: A Game-Theoretic Analysis
https://resolver.caltech.edu/CaltechAUTHORS:20160303-094626115
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1980
DOI: 10.1287/mnsc.26.9.935
This paper examines the existence and characterization of pure strategy Nash Equilibria in multiple-object auction games in which buyers face a binding constraint on exposure. There are five major results. First, symmetric Nash equilibria exist if and only if there are two or less buyers and two or less items. Second, a Nash equilibrium may not exist if the seller sets a positive reservation bid. Third, asymmetric solutions to symmetrically parameterized games typically involve "high-low" strategies: Each buyer submits positive bids only on some restricted subset of the items. Fourth, Nash equilibria typically generate zero "surplus" to the buyers. Fifth, when asymmetric solutions exist and the buyer are identical, these solutions are never unique.https://authors.library.caltech.edu/records/rzdkk-gc950Risk Advantages and Information Acquisition
https://resolver.caltech.edu/CaltechAUTHORS:20160303-101627882
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1982
DOI: 10.2307/3003443
In some competitive situations under uncertainty, less risk adverse competitors have an advantage over more risk adverse opponents. Private information acquisition by the advantaged players diminishes this advantage by reducing the risk faced by their opponents in a Nash equilibrium. This tradeoff between risk advantages and informational advantages is examined in the context of a duopoly model with uncertain demand. It is found that private information acquisition may reduce the risk advantage by so much that the overall effect is to make the informed, less risk adverse competitor worse off and the uninformed, more risk adverse competitor better off.https://authors.library.caltech.edu/records/7scf6-kk935Asset Valuation in an Experimental Market
https://resolver.caltech.edu/CaltechAUTHORS:20140220-122548702
Authors: {'items': [{'id': 'Forsythe-R', 'name': {'family': 'Forsythe', 'given': 'Robert'}, 'orcid': '0000-0002-5821-1519'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Plott-C-R', 'name': {'family': 'Plott', 'given': 'Charles R.'}, 'orcid': '0000-0001-8363-3628'}]}
Year: 1982
The time path of asset prices is studied within a stationary experimental environment.
After several replications prices converge to a perfect foresight equilibrium. A sequential
market having an "informational trap" and a futures market are also studied.https://authors.library.caltech.edu/records/0kad5-gfy11Warranties, Performance, and the Resolution of Buyer-Seller Disputes
https://resolver.caltech.edu/CaltechAUTHORS:20160303-111703240
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Romer-T', 'name': {'family': 'Romer', 'given': 'Thomas'}}]}
Year: 1983
DOI: 10.2307/3003540
Many disputes between buyers and sellers concern product quality and whether a claim of poor product performance is covered by a warranty issued by the seller. We develop and analytical framework in which average product quality, buyer preferences, production and transaction costs, and the extent to which "true" quality can be observed by buyer and seller interact to determine warranties, product price, and the likelihood of disputes. Using this framework, we examine the impact of various types of dispute resolution mechanisms (DRM's) on these outcomes. We relate features of DRM's, such as cost and accuracy, to prices, warranties, and allocative efficiency of the market in which disputes arise.https://authors.library.caltech.edu/records/wpbxp-4v507A Strategic Calculus of Voting
https://resolver.caltech.edu/CaltechAUTHORS:20160303-110552693
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-Howard', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}]}
Year: 1983
DOI: 10.1007/BF00124048
Presents a game-theoretic model of voter turnout, which features voting over two fixed alternatives as in a two-candidate election or in a referendum or initiative. Behavior of voters; Assumptions on the cost of voting against its potential benefits; Investigation on voting probabilities and the turnout decisions; Analysis of voting as a participation game.https://authors.library.caltech.edu/records/4a0yh-86s96Bundling Decisions by a Multiproduct Monopolist with Incomplete Information
https://resolver.caltech.edu/CaltechAUTHORS:20160303-105134641
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1983
DOI: 10.2307/1912001
This paper analyzes bundling decisions of a rnultiproduct monopolist facing uncertain
demand. The monopolist sells his products using an auction mechanism and the market is
analyzed as a game with incomplete information in which the buyers as well as the seller
are strategic agents. With a small number of buyers, a profit maximizing seller will bundle
all his output. This makes buyers uniformly worse off compared to the case where the same
monopolist does not bundle, in the sense that any buyer is worse off regardless of his
demand for the monopolist's outputs. With a larger number of buyers, the seller will have a
tendency to unbundle his output and "high-demand" buyers are worse off than they would
be if the monopolist bundled his output. "Low-demand" buyers. on the other hand. are
always better off when the monopolist unbundles his output, regardless of the number of
competing buyers. Despite the fact that "high demand" buyers are the typical purchasers
of the monopolist's output, the net effect of increasing the number of buyers is greater
market efficiency since bundling creates market inefficiencies both ex post and ex ante.https://authors.library.caltech.edu/records/13jga-3nc81Spatial Equilibrium with Entry
https://resolver.caltech.edu/CaltechAUTHORS:20160303-113443753
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1984
DOI: 10.2307/2297710
This paper examines spatial equilibrium in political competition when established parties choose their platforms competitively while rationally anticipating entry of a vote-maximizing third party. The resulting equilibrium is substantially different from the Hotelling "median" equilibrium. Established parties are spatially separated and third parties will generally lose the election. This provides one theoretical explanation for the stability of two-party systems. Namely that non-cooperative behavior between established parties can effectively prevent third parties from winning.https://authors.library.caltech.edu/records/yhwr1-yj270Participation and the provision of discrete public goods: a strategic analysis
https://resolver.caltech.edu/CaltechAUTHORS:20160303-114154701
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-H', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}]}
Year: 1984
DOI: 10.1016/0047-2727(84)90023-9
This paper considers the Nash equilibria to a game where a discrete public good is to be provided. Each individual may participate by making a fixed contribution. If a sufficient number of contributions are made, the good is provided. Otherwise, the good is not provided. One variant of the rules allows for contributions to be refunded when the good is not provided. For pure strategies, we find that the Nash equilibria with a refund are a superset of those without a refund. For both rules, the efficient number of players contributing is an equilibrium. For mixed strategies, to every equilibrium without a refund there is a corresponding equilibrium with a refund with a higher number of expected contributors. Mixed strategy equilibria 'disappear' as the number of players grows large. Some results reported in the experimental literature are discussed in light of these theoretical results.https://authors.library.caltech.edu/records/wp12c-t9x22Futures Markets and Informational Efficiency: A Laboratory Examination
https://resolver.caltech.edu/CaltechAUTHORS:20140324-102333150
Authors: {'items': [{'id': 'Forsythe-R', 'name': {'family': 'Forsythe', 'given': 'Robert'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Plott-C-R', 'name': {'family': 'Plott', 'given': 'Charles R.'}}]}
Year: 1984
DOI: 10.2307/2327607
Through the use of laboratory market methodology, the effect of a futures market on the time path of asset prices is studied and competing models of asset pricing are analyzed. With replication of market conditions, the predictions of rational expectations equilibrium model are relatively accurate whether or not futures markets are present. However, the presence of futures markets increases the speed with which an efficient equilibrium is achieved. While this more rapid adjustment can increase the variance of spot market prices as they move to equilibrium, this increased variance reflects efficiency gains due to better information.https://authors.library.caltech.edu/records/j4dwh-nbq44Repeated Insurance Contracts and Learning
https://resolver.caltech.edu/CaltechAUTHORS:20160303-110800428
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Spatt-C', 'name': {'family': 'Spatt', 'given': 'Chester'}}]}
Year: 1985
This article considers a repeated insurance model with incomplete information in which the insurer and the consumer both learn over time about the unknown risk category of the consumer. Care choices by young consumers affect the informational value of the accident history. Under an optimal scheme of long-term insurance contracts, young consumers will always be "subsidized" by old consumers, and consumers who are reassessed as low-risk types are always subsidizers (i.e., reverse experience ratings). We compare this optimal scheme with the set of contracts that would emerge in a competitive market if only short-term contracting were possible. These sequentially competitive contracts can lead to over-investment in care by both young and old consumers, relative to the optimum, in contrast to the underinvestment problem associated with moral hazard in insurance.https://authors.library.caltech.edu/records/44mbw-bbf34Uncertainty Resolution, Private Information Aggregation and the Cournot Competitive Limit
https://resolver.caltech.edu/CaltechAUTHORS:20160303-112509959
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1985
DOI: 10.2307/2297470
A Cournot model of oligopoly in which otherwise identical firms have private differential information about the common cost of production and a shared (but unknown) demand curve is examined. A Bayesian equilibrium of the corresponding game of incomplete information is solved for explicitly and analysed. In the symmetric equilibrium, different firms produce at different output levels because they have different information. Because the information individual firms have is random, total output and hence market price is also random for any finite number of firms.
The main result of the paper relates to the asymptotic properties of the equilibrium, when the number of firms becomes large. Under fairly general conditions on the joint distribution of demand and individual firms' information about demand, the random equilibrium price converges almost surely to a constant in the limit. More importantly, this price equals the perfectly competitive price. In other words, in large markets, even if no firm knows the true market demand curve and firms are not price-takers and do not use price as a signal to improve their information, the competitive price will prevail with certainty. In the limit, aggregate outcomes are as if all firms shared their private information with each other.https://authors.library.caltech.edu/records/w9b5v-p9g96Voter Participation and Strategic Uncertainty
https://resolver.caltech.edu/CaltechAUTHORS:20160303-112114151
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-H', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}]}
Year: 1985
DOI: 10.2307/1956119
The paradox of not voting is examined in a model where voters have uncertainty about the preferences and costs of other voters. In game-theoretic models of voter participation under complete information, equilibrium outcomes can have substantial turnout even when voting costs are relatively high. In contrast, when uncertainty about preferences and costs is present, only voters with negligible or negative net voting costs participate when the electorate is large.https://authors.library.caltech.edu/records/6vm2j-z1g12Pareto Optimality in Spatial Voting Models
https://resolver.caltech.edu/CaltechAUTHORS:20160303-104853421
Authors: {'items': [{'id': 'Coughlin-P-J', 'name': {'family': 'Coughlin', 'given': 'P. J.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'T. R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1985
DOI: 10.1007/BF00649266
This paper studies the Pareto optimality properties of policy proposals that are made by k (k≧2) strategic candidates that face uncertainty about the choices that the voters will make. Our first theorem shows that, under very general conditions, any proposal that is a best reply for a candidate is necessarily Pareto optimal. This theorem, in turn, implies that, under slightly stronger conditions, all candidate proposals that are made in a Nash equilibrium or sequentially are necessarily Pareto optimal. Our second theorem shows that, when these conditions are themselves slightly strengthened, any proposal outside of the Pareto set is strictly dominated by at least one proposal inside the Pareto set.https://authors.library.caltech.edu/records/y68dj-kkj10Comments on the papers by Austen-Smith and Shepsle. The institutional social-choice paradigm
https://resolver.caltech.edu/CaltechAUTHORS:20160310-155953015
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1986
DOI: 10.1007/BF00124933
Comments on the articles of David Austen-Smith and Kenneth A. Shepsle regarding legislative institutions. Problems raised on the interactions between elections and legislatures; Approach used by Austen-Smith on the relationship between electoral and legislative theories; Discussion of the institutional social-choice paradigm; Views on the legislative model of Shepsle.https://authors.library.caltech.edu/records/hqk88-pks14Private Information in Large Economies
https://resolver.caltech.edu/CaltechAUTHORS:20160303-110214889
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Srivastava-S', 'name': {'family': 'Srivastava', 'given': 'Sanjey'}}]}
Year: 1986
DOI: 10.1016/0022-0531(86)90019-0
This paper examines the effect of private information in large economies. We show that in a model with stochastic information structures, the restrictions imposed on allocations by the presence of private information disappear in large economies. We also show that for a large class of direct mechanisms, the incentive for any agent to falsely report private information goes to zero as the number of agents becomes large. These results provide an "informational smallness" analog to existing "quantity smallness" limiting results in the literature.https://authors.library.caltech.edu/records/1h7ap-9t685The Downsian model of electoral participation: Formal theory and empirical analysis of the constituency size effect
https://resolver.caltech.edu/CaltechAUTHORS:20160303-114737153
Authors: {'items': [{'id': 'Hansen-S', 'name': {'family': 'Hansen', 'given': 'Stephen'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-H', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}]}
Year: 1987
DOI: 10.1007/BF00116941
This paper applies a game-theoretic model of participation under uncertainty to investigate the negative relationship between constituency size and voter turnout rates: theconstituency size effect. We find that this theoretical model accounts for almost all of the variation in turnout due to size in cross sectional data from school budget referenda.https://authors.library.caltech.edu/records/mw09x-jsc52On Bayesian Implementable Allocations
https://resolver.caltech.edu/CaltechAUTHORS:20160303-103738868
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Srivastava-S', 'name': {'family': 'Srivastava', 'given': 'Sanjay'}}]}
Year: 1987
DOI: 10.2307/2297511
This paper identifies several social choice correspondences which are or are not fully implementable in economic environments when agents are incompletely informed about the environment. We show that in contrast to results in the case of complete information, neither efficient allocations nor core allocations define implementable social choice correspondences. We also identify conditions under which the Rational Expectations Equilibrium correspondence is implementable. We extend the concepts of fair allocations and Lindahl allocations to economies with incomplete information, and show that envy-free allocations and Lindahl allocations are implementable under some conditions while fair allocations are not.https://authors.library.caltech.edu/records/8tphr-xk536The Relationship Between Information, Ideology, and Voting Behavior
https://resolver.caltech.edu/CaltechAUTHORS:20160303-102054862
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Poole-K-T', 'name': {'family': 'Poole', 'given': 'Keith T.'}}]}
Year: 1987
The question of voter sophistication is important for understanding voter and candidate behavior in mass elections. We develop an index of voter information - based on perceptual data - and find that it is significantly related to ideological extremism and voting behavior. Individuals with a high level of information tend to be more extreme than those with low levels and are much more likely to vote.https://authors.library.caltech.edu/records/dw863-tmp98Private incentives in social dilemmas: The effects of incomplete information and altruism
https://resolver.caltech.edu/CaltechAUTHORS:20160303-102157237
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-H', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}]}
Year: 1988
DOI: 10.1016/0047-2727(88)90035-7
This paper analyzes the provision of discrete public goods when individuals have altruistic preferences which others do not precisely know. The problem is formulated and solved as a Bayesian game. In contrast to standard social psychological approaches, based on such natural language terms as greed, fear, and trust, the Bayesian approach provides a rigorous mathematical treatment of social participation. This theory is shown to make strong testable predictions that can integrate data collected across a wide variety of natural and experimental settings. The altruism model is shown to be supported by existing experimental data on binary voluntary contribution games.https://authors.library.caltech.edu/records/t5fcg-abe33Agendas, Strategic Voting, and Signaling with Incomplete Information
https://resolver.caltech.edu/CaltechAUTHORS:20160307-150818295
Authors: {'items': [{'id': 'Ordeshook-P-C', 'name': {'family': 'Ordeshook', 'given': 'Peter C.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1988
DOI: 10.2307/2111131
The literature on agendas with sincere and strategic voting represents an important contribution to our understanding of committees, of institutions, and of the opportunities to manipulate outcomes by the manipulation of institutions. That literature, though, imposes an assumption that may be unrealistic in many situations; namely, that everyone knows the preferences of everyone else. In this essay we apply Bayesian equilibrium analysis to show that the properties of agendas that others derive by assuming complete information do not hold necessarily under incomplete information. First, a Condorcet winner need not be selected, even if nearly everyone on the committee most prefers it. Second, the "two-step theorem," that any outcome reachable in n voting stages via some amendment agenda is reachable in two stages under sophisticated voting, need not hold. Third, nonbinding votes, such as straw polls, can critically affect final outcomes.https://authors.library.caltech.edu/records/pqqj1-99264Theories and Tests of Blind Bidding in Sealed-bid Auctions
https://resolver.caltech.edu/CaltechAUTHORS:20160307-151348936
Authors: {'items': [{'id': 'Forsythe-R', 'name': {'family': 'Forsythe', 'given': 'Robert'}}, {'id': 'Isaac-R-M', 'name': {'family': 'Isaac', 'given': 'R. Mark'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1989
In this article we report the results from a series of laboratory markets in which sellers have better information about the quality of an item than any of the potential buyers. Sellers may voluntarily choose to reveal this information or they may instead decide to "blind bid" the item. We find that a sequential equilibrium model where buyers "assume the worst" is a good predictor of behavior in these simple markets. This equilibrium is not instantaneously attained, however, but there is an unraveling process which describes how this equilibrium is approached. At the conclusion of the market, allocations tend to be full efficient, ex post.https://authors.library.caltech.edu/records/pbhnm-wbh37Implementation with Incomplete Information in Exchange Economies
https://resolver.caltech.edu/CaltechAUTHORS:20160307-145257973
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Srivastava-S', 'name': {'family': 'Srivastava', 'given': 'Sanjay'}}]}
Year: 1989
In this paper, we analyze the problem of designing incentive compatible mechanisms in pure exchange economic environments when agents have incomplete information. The equilibrium concept employed is Bayesian Nash equilibrium and the notion of implemantation is full implementation, which is stronger than the more commonly employed notion of truthful implementation. An allocation rule is truthfully implementable if there exists a direct mechanism to which truth telling is an equilibrium and which yields the allocation rule as its truthful equilibrium outcome. An allocation rule is fully implementable if there exists mechanism which yields the allocation rule as its unique equilibrium outcome. More generally, a set of allocation rules, or a social choice set, is fully implementable if there exist a mechanism whose equilibrium outcomes coincide with the set. This stronger notion of implemention avoids the well known problems of multiple equilibria which arise in direct revelation games. We develop a condition, termed Bayesian monotonicity, which we show is necessary for full implementation. An incentive compatibility condition is also necessary. We prove that Bayesian monotonicity and a slightly stronger incentive compatibility condition are sufficient for full implementation when there are at least three agents. We present several examples of allocation rules which do and do not satisfy our condition. One example is that of an allocation rule which is fully inplementable by an indirect mechanism, but for which every equivalent direct mechanism has multiple equilibrium outcomes.https://authors.library.caltech.edu/records/fgvej-y8374Mechanism Design with Incomplete Information: A Solution to the Implementation Problem
https://resolver.caltech.edu/CaltechAUTHORS:20160307-152427094
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Srivastava-S', 'name': {'family': 'Srivastava', 'given': 'Sanjay'}}]}
Year: 1989
DOI: 10.1086/261621
The main result of this paper is that the multiple equilibrium problem in mechanism design can be avoided in private-value models if agents do not use weakly dominated strategies in equilibrium. We show that in such settings, any incentive-compatible allocation rule can be made the unique equilibrium outcome to a mechanism. We derive a general necessary condition for unique implementation that implies that the positive result for private-value models applies. with considerably less generality to the common-value settings.https://authors.library.caltech.edu/records/v100j-dph18Effects of Insider Trading Disclosures on Speculative Activity in Futures Prices
https://resolver.caltech.edu/CaltechAUTHORS:20160307-152942560
Authors: {'items': [{'id': 'Jagannathan-K', 'name': {'family': 'Jagannathan', 'given': 'Krishna'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1989
DOI: 10.1111/j.1465-7295.1989.tb02013.x
This paper explores a simple model of the effects of requiring a public disclosure of insider trader activity in future markets.https://authors.library.caltech.edu/records/asg4w-hzx74Cartel Enforcement with Uncertainty About Costs
https://resolver.caltech.edu/CaltechAUTHORS:20160307-150324015
Authors: {'items': [{'id': 'Cramton-P-C', 'name': {'family': 'Cramton', 'given': 'Peter C.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1990
DOI: 10.2307/2526626
What cartel agreements are possible when firms have private information about productions costs? For private cost uncertainty we characterize the set of cartel agreements that can be supported, recognizing incentive and participation constraints. If defection results in either Cournot or Bertrand competition, the incentive problem in large cartels is severe enough to prevent the cartel from achieving the monopoly outcome. However if the cartel agreement requires less than unanimous ratification by the member firms, then the incentive problem can be overcome in large cartels. With common cost uncertainty, perfect collusion is possible in large cartels, regardless of the ratification rule.https://authors.library.caltech.edu/records/k5k96-yka97Nash Implementation Using Undominated Strategies
https://resolver.caltech.edu/CaltechAUTHORS:20160307-145552688
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Srivastava-S', 'name': {'family': 'Srivastava', 'given': 'Sanjay'}}]}
Year: 1991
We study the problem of implementing social choice correspondences using the concept of undominated Nash equilibrium, i.e. Nash equilibrium in which no one uses a weakly dominated strategy. We show that this mild refinement of Nash equilibrium has a dramatic impact on the set of implementable correspondences. Our main result is that if there are at least three agents in the society, then any correspondence which satisfies the usual no veto power condition is implementable unless some agents are completely indifferent over all possible outcomes. Many common welfare criteria, such as the Pareto correspondence, and several familiar voting rules, such as majority and plurality rules, satisfy our conditions. This possibility result stands in sharp contrast to the more restrictive findings with implementation in either Nash equilibrium or subgame perfect equilibrium. We present several examples to illustrate the difference between undominated Nash implementation and implementation with alternative solution concepts.https://authors.library.caltech.edu/records/pyyej-kg057Testing for Effects of Cheap Talk in a Public Goods Game with Private Information
https://resolver.caltech.edu/CaltechAUTHORS:20160303-154429739
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-H', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}]}
Year: 1991
DOI: 10.1016/0899-8256(91)90022-7
We investigate a game where player endowments are private information. If two of the three players contribute their endowments, a "public" benefit is paid to all three players. In one treatment, there is a single move with simultaneous decisions. In a second, cheap talk treatment, players may send binary messages prior to the decision move. Experimental data strongly support the equilibrium model for the first treatment. The results are mixed for the cheap talk treatment. While subjects condition heavily on the messages they receive, message behavior is less systematic.https://authors.library.caltech.edu/records/jcpzw-mkr13Efficient Trading Mechanisms with Pre-play Communication
https://resolver.caltech.edu/CaltechAUTHORS:20160307-140227182
Authors: {'items': [{'id': 'Srivastava-S', 'name': {'family': 'Srivastava', 'given': 'Sanjay'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1991
DOI: 10.1016/0022-0531(91)90057-B
This paper studies the problem of designing efficient trading mechanisms that are immune to pre-play communication. It is well known that equilibrium behavior can be affected, sometimes drastically, if players have the opportunity to exchange messages prior to playing some particular game. We investigate the relationship between efficiency, pre-play communication, and unique implementation in Bayesian environments with independent types and private values. We identify a class of simple mechanisms which are immune to pre-play communication and show that any incentive efficient allocation can be uniquely implemented by such a mechanism.https://authors.library.caltech.edu/records/y6cyq-m7s94An Experimental Study of the Centipede Game
https://resolver.caltech.edu/CaltechAUTHORS:20160307-145049106
Authors: {'items': [{'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1992
We report on an experiment in which individuals play a version of the centipede game. In this game, two players alternately get a chance to take the larger portion of a continually escalating pile of money. As soon as one person takes, the game ends with that player getting the larger portion of the pile, and the other player getting the smaller portion. If one views the experiment as a complete information game, all standard game theoretic equilibrium concepts predict the first mover should take the large pile on the first round. The experimental results show that this does not occur. An alternative explanation for the data can be given if we reconsider the game as a game of incomplete information in which there is some uncertainty over the payoff functions of the players. In particular, if the subjects believe there is some small likelihood that the opponent is an altruist, then in the equilibrium of this incomplete information game, players adopt mixed strategies in the early rounds of the experiment, with the probability of taking increasing as the pile gets larger. We investigate how well a version of this model explains the data observed in the centipede experiments.https://authors.library.caltech.edu/records/s1x8m-q1f07A Bayesian Sequential Experimental Study of Learning in Games
https://resolver.caltech.edu/CaltechAUTHORS:20160307-111846023
Authors: {'items': [{'id': 'El-Gamal-M', 'name': {'family': 'El-Gamal', 'given': 'Mahmoud'}}, {'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1993
DOI: 10.1080/01621459.1993.10476292
We apply a sequential Bayesian sampling procedure to study two models of learning in repeated games. In the first model individuals learn only about an opponent when they play her or him repeatedly but do not update from their experience with that opponent when they move on to play the same game with other opponents. We label this the nonsequential model. In the second model individuals use Bayesian updating to learn about population parameters from each of their opponents, as well as learning about the idiosyncrasies of that particular opponent. We call this the sequential model. We sequentially sample observations on the behavior of experimental subjects in the so-called "centipede game." This game allows for a trade-off between competition and cooperation, which is of interest in many economic situations. At each point in time, the "state" of our dynamic problem consists of our beliefs about the two models and beliefs about the nuisance parameters of the two models. Our "choice" set is to sample or not to sample one more data point and, if we should not sample, which of the models to select. After 19 matches (4 subjects per match), we stop and reject the nonsequential model in favor of the sequential model.https://authors.library.caltech.edu/records/5e3qh-by848Computational Issues in the Statistical Design and Analysis of Experimental Games
https://resolver.caltech.edu/CaltechAUTHORS:20160307-112533381
Authors: {'items': [{'id': 'El-Gamal-M', 'name': {'family': 'El-Gamal', 'given': 'Mahmoud'}}, {'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1993
DOI: 10.1177/109434209300700302
One goal of experimental economics is to provide data to identify models that best describe the behavior of experimental subjects and, more generally, human economic behavior. We discuss here what we think are the three main steps required to make experimental investigations of economic games as statistically informative as possible: finding the solution of the experimental game under the postulated equilibrium or other economic models, selecting from a potential class of experimental designs the optimal one for discriminating between those models, and choosing an optimal stopping rule that indicates when to stop sampling data and accept one model as the best explanation of the data. Each step can be computationally intensive. We offer an algorithmic presentation of the necessary computations in each of the three steps and illustrate these procedures by examples from our research on learning models in experimental games with incomplete information. These three steps of experimental design and analysis are not limited to experimental games, but the computational burden of implementing these algorithms in other experimental environments - for example, market experiments - requires further considerations with which we have not dealt.https://authors.library.caltech.edu/records/8wa0d-xhz77Voting and Lottery Drafts as Efficient Public Goods Mechanisms
https://resolver.caltech.edu/CaltechAUTHORS:20160307-113140393
Authors: {'items': [{'id': 'Ledyard-J-O', 'name': {'family': 'Ledyard', 'given': 'John O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1994
DOI: 10.2307/2297984
This paper characterizes interim efficient mechanisms for public good production and cost allocation in a two-type environment with risk-neutral, quasi-linear preferences and fixed-size projects, where the distribution of the private good, as well as the public goods decision, affects social welfare. An efficient public good decision can always be accomplished by a majority voting scheme, where the number of "YES" votes required depends on the welfare weights in a simple way. The results are shown to have a natural geometry and an intuitive interpretation. We also extend these results to allow for restrictions on feasible transfer rules, ranging from the traditional unlimited transfers to the extreme case of no transfers.
For a range of welfare weights, an optimal scheme is a two-stage procedure which combines a voting stage with a second stage where an even-chance lottery is used to determine who pays. We call this the "lottery draft mechanism" Since such a cost-sharing scheme does not require transfers, it follows that in many cases transfers are not necessary to achieve the optimal allocation. For other ranges of welfare weights the second stage is more complicated, but the voting stage remains the same. If transfers are completely infeasible, randomized voting rules may be optimal. The paper also provides a geometric characterization of the effects of voluntary participation constraints.https://authors.library.caltech.edu/records/pxy7d-tv538Undominated Nash Implementation in Bounded Mechanisms
https://resolver.caltech.edu/CaltechAUTHORS:20160303-154652555
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Jackson-Matthew-O', 'name': {'family': 'Jackson', 'given': 'Matthew O.'}, 'orcid': '0000-0001-9846-4249'}, {'id': 'Srivastava-Sanjay', 'name': {'family': 'Srivastava', 'given': 'Sanjay'}}]}
Year: 1994
DOI: 10.1006/game.1994.1028
We study implementation in undominated Nash equilibrium by bounded mechanisms. (An undominated Nash equilibrium is a Nash equilibrium in which no agent uses a weakly dominated strategy. A mechanism is bounded if every dominated strategy is dominated by some undominated strategy.) We identify necessary conditions and sufficient conditions for such implementation. These conditions are satisfied in virtually all economic environments, and are also satisfied by interesting correspondences from the social choice literature. For economic settings, we provide a particularly simple implementing mechanism for which the undominated equilibrium outcomes coincide with those obtained from the iterative elimination of weakly dominated strategies.https://authors.library.caltech.edu/records/ehne3-tgb19Repeated Play, Cooperation and Coordination: An Experimental Study
https://resolver.caltech.edu/CaltechAUTHORS:20160307-113706304
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-H', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}]}
Year: 1994
DOI: 10.2307/2297903
An experiment was conducted to test whether discounted repeated play leads to greater cooperation and coordination than one-shot play in a public good environment with incomplete information. The experiment was designed so that, theoretically, repeated play can sustain equilibria with substantially higher group earnings than result in the one-shot Bayesian Nash equilibrium. The design varied a number of environmental parameters, including the size of the group, and the statistical distribution of marginal rates of substitution between the public and private good. Marginal rates of substitution were private information but the statistical distribution was common knowledge. The results indicate that repetition leads to greater cooperation, and that the magnitude of these gains depends systematically both on the ability of players to monitor each other's strategy and on the environmental parameters.https://authors.library.caltech.edu/records/0fwan-z4y59Learning in experimental games
https://resolver.caltech.edu/CaltechAUTHORS:20160307-113401222
Authors: {'items': [{'id': 'El-Gamal-M', 'name': {'family': 'El-Gamal', 'given': 'Mahmoud'}}, {'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1994
DOI: 10.1007/BF01213818
Experimental games typically involve subjects playing the same game a number of times. In the absence of perfect rationality by all players, the subjects may use the behavior of their opponents in early rounds to learn about the extent of irrationality in the population they face. This makes the problem of finding the Bayes-Nash equilibrium of the experimental game much more complicated than finding the game-theoretic solution to the ideal game without irrationality. We propose and implement a computationally intensive algorithm for finding the equilibria of complicated games with irrationality via the minimization of an appropriate multi-variate function. We propose two hypotheses about how agents learn when playing experimental games. The first posits that they tend to learn about each opponent as they play it repeatedly, but do not learn about the population parameters through their observations of random opponents (myopic learning). The second posits that both types of learning take place (sequential learning). We introduce a computationally intensive sequential procedure to decide on the informational value of conducting additional experiments. With the help of that procedure, we decided after 12 experiments that our original model of irrationality was unsatisfactory for the purpose of discriminating between our two hypotheses. We changed our models, allowing for two different types of irrationality, reanalyzed the old data, and conducted 7 more experiments. The new model successfully discriminated between our two hypotheses about learning. After only 7 more experiments, our approximately optimal stopping rule led us to stop sampling and accept the model where both types of learning occurhttps://authors.library.caltech.edu/records/yy5zt-adj49Vertigo: Comparing Structural Models of Imperfect Behavior in Experimental Games
https://resolver.caltech.edu/CaltechAUTHORS:20160303-154112586
Authors: {'items': [{'id': 'El-Gamal-M', 'name': {'family': 'El-Gamal', 'given': 'Mahmoud'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1995
DOI: 10.1016/S0899-8256(05)80004-1
We introduce the game of Vertigo to study learning in experimental games with one-sided incomplete information. Our models allow players to make errors when choosing their actions. We compare six models where the players are modeled as sophisticated (taking errors in action into account when constructing strategies) or unsophisticated on one dimension, and employ Bayes' rule, a faster updating rule, or no updating at all on the second. Using a fully Bayesian structural econometric approach, we find that unsophisticated models perform better than sophisticated models, and models with no (or slower) updating perform better than models with faster updating.https://authors.library.caltech.edu/records/4vgsv-k4922Introduction [to a special issue of Games and Economic Behavior devoted to what we call experimental game theory]...
https://resolver.caltech.edu/CaltechAUTHORS:20160303-155008643
Authors: {'items': [{'id': 'Ledyard-J-O', 'name': {'family': 'Ledyard', 'given': 'John O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1995
DOI: 10.1006/game.1995.1022
This special issue of Games and Economic Behavior is devoted to what
we call experimental game theory, and the intention is threefold. First,
we want to provide a window into one of the exciting new areas in game
theoretic research. Second, we try to collect in one place some of the
best current work that spans many of the interesting topics current]y being
studied. Third, we hope to encourage more game theorists to think about
the behavioral and empirical content of their models, particularly in relation
to data from carefully controlled laboratory experiments. The belief
is that theory and experiment do not develop independently and the expectation
is that better interaction will ultimately lead to both better theory
and better experiment.https://authors.library.caltech.edu/records/a64d9-6w039Quantal response equilibria for normal form games
https://resolver.caltech.edu/CaltechAUTHORS:20171128-164515991
Authors: {'items': [{'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1995
DOI: 10.1006/game.1995.1023
We investigate the use of standard statistical models for quantal choice in a game theoretic setting. Players choose strategies based on relative expected utility and assume other players do so as well. We define a quantal response equilibrium (ORE) as a fixed point of this process and establish existence. For a logit specification of the error structure, we show that as the error goes to zero, QRE approaches a subset of Nash equilibria and also implies a unique selection from the set of Nash equilibria in generic games. We fit the model to a variety of experimental data sets by using maximum likelihood estimation.https://authors.library.caltech.edu/records/4fh4n-4c340Introduction
https://resolver.caltech.edu/CaltechAUTHORS:20170707-150810359
Authors: {'items': [{'id': 'Ledyard-J-O', 'name': {'family': 'Ledyard', 'given': 'John O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1995
DOI: 10.1006/game.1995.1022
This special issue of Games and Economic Behavior is devoted to what we call experimental game theory, and the intention is threefold. First, we want 10 provide a window into one of the exciting new areas in game theoretic research. Second, we try to collect in one place some of the best current work that spans many of the interesting topics currently being studied. Third, we hope to encourage more game theorists to think about the behavioral and empirical content of their models, particularly in relation to data from carefully controlled laboratory experiments. The belief is that theory and experiment do not develop independently and the expectation is that better interaction will ultimately lead to both better theory and better experiment.https://authors.library.caltech.edu/records/y3bpp-z6d86Ratifiable Mechanisms: Learning from Disagreement
https://resolver.caltech.edu/CaltechAUTHORS:20160303-155150772
Authors: {'items': [{'id': 'Cramton-P-C', 'name': {'family': 'Cramton', 'given': 'Peter C.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1995
DOI: 10.1006/game.1995.1032
In a mechanism design problem, participation constraints require that all types prefer the proposed mechanism to some status quo. If equilibrium play in the status quo mechanism depends on the players' beliefs, then the inference drawn if someone objects to the proposed mechanism may alter the participation constraints. We investigate this issue by modeling the mechanism design problem as a two-stage process, consisting of a ratification state followed by the actual play of the chosen game. We develop and illustrate a new concept, ratifiability, that takes account of inferences from a veto in a consistent way.https://authors.library.caltech.edu/records/brcbt-fk832Ratifiable Mechanisms: Learning from Disagreement
https://authors.library.caltech.edu/records/9e324-de316
Authors: {'items': [{'id': 'Cramton-P-C', 'name': {'family': 'Cramton', 'given': 'Peter C.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}}]}
Year: 1995
In a mechanism design problem, participation constraints require that all types prefer the proposed mechanism to some status quo. If equilibrium play in the status quo mechanism depends on the players' beliefs, then the inference drawn if someone objects to the proposed mechanism may alter the participation constraints. We investigate this issue by modeling the mechanism design problem as a two-stage process, consisting of a ratification state followed by the actual play of the chosen game. We develop and illustrate a new concept, ratifiability, that takes account of inferences from a veto in a consistent way.https://authors.library.caltech.edu/records/9e324-de316In or out?: Centralization by majority vote
https://resolver.caltech.edu/CaltechAUTHORS:20160307-141704583
Authors: {'items': [{'id': 'Crémer-J', 'name': {'family': 'Crémer', 'given': 'Jacques'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1996
DOI: 10.1016/0014-2921(95)00053-4
We present a positive theory of centralization of political decisions. Voters choose centralization or decentralization depending on their forecast of the political organization that will favor the policies they prefer. We study the induced preferences for centralization as well results of different forms of referenda.https://authors.library.caltech.edu/records/wjz54-bad69A Statistical Theory of Equilibrium in Games
https://resolver.caltech.edu/CaltechAUTHORS:20160307-140531268
Authors: {'items': [{'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1996
DOI: 10.1111/j.1468-5876.1996.tb00043.x
This paper describes a statistical model of equiliobrium behaviour in games, which we call Quantal Response Equilibrium (QRE). The key feature of the equilibrium is that individuals do not always play responses to the strategies of their opponents, but play better strategies with higher probability than worse strategies. we illustrate several different applications of this approach, and establish a number of theoretical properties of this equilibrium concept. We also demonstrate an equililance between this equilibrium notion and Bayesian games derived from games of complete information with perturbed payoffshttps://authors.library.caltech.edu/records/b5stn-7dk89An experimental study of constant-sum centipede games
https://resolver.caltech.edu/CaltechAUTHORS:20160307-114236264
Authors: {'items': [{'id': 'Fey-M', 'name': {'family': 'Fey', 'given': 'Mark'}}, {'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1996
DOI: 10.1007/BF02425258
In this paper, we report the results of a series of experiments on a version of the centipede game in which the total payoff to the two players is constant. Standard backward induction arguments lead to a unique Nash equilibrium outcome prediction, which is the same as the prediction made by theories of "fair" or "focal" outcomes.
We find that subjects frequently fail to select the unique Nash outcome prediction. While this behavior was also observed in McKelvey and Palfrey (1992) in the "growing pie" version of the game they studied, the Nash outcome was not "fair", and there was the possibility of Pareto improvement by deviating from Nash play. Their findings could therefore be explained by small amounts of altruistic behavior. There are no Pareto improvements available in the constant-sum games we examine. Hence, explanations based on altruism cannot account for these new data.
We examine and compare two classes of models to explain these data. The first class consists of non-equilibrium modifications of the standard "Always Take" model. The other class we investigate, the Quantal Response Equilibrium model, describes an equilibrium in which subjects make mistakes in implementing their best replies and assume other players do so as well. One specification of this model fits the experimental data best, among the models we test, and is able to account for all the main features we observe in the data.https://authors.library.caltech.edu/records/hdjj8-85k83An experimental study of constant-sum centipede games
https://resolver.caltech.edu/CaltechAUTHORS:20160307-114236264
Authors: {'items': [{'id': 'Fey-M', 'name': {'family': 'Fey', 'given': 'Mark'}}, {'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1996
DOI: 10.1007/BF02425258
In this paper, we report the results of a series of experiments on a version of the centipede game in which the total payoff to the two players is constant. Standard backward induction arguments lead to a unique Nash equilibrium outcome prediction, which is the same as the prediction made by theories of "fair" or "focal" outcomes.
We find that subjects frequently fail to select the unique Nash outcome prediction. While this behavior was also observed in McKelvey and Palfrey (1992) in the "growing pie" version of the game they studied, the Nash outcome was not "fair", and there was the possibility of Pareto improvement by deviating from Nash play. Their findings could therefore be explained by small amounts of altruistic behavior. There are no Pareto improvements available in the constant-sum games we examine. Hence, explanations based on altruism cannot account for these new data.
We examine and compare two classes of models to explain these data. The first class consists of non-equilibrium modifications of the standard "Always Take" model. The other class we investigate, the Quantal Response Equilibrium model, describes an equilibrium in which subjects make mistakes in implementing their best replies and assume other players do so as well. One specification of this model fits the experimental data best, among the models we test, and is able to account for all the main features we observe in the data.https://authors.library.caltech.edu/records/ppx9n-cx690Altruism, reputation and noise in linear public goods experiments
https://resolver.caltech.edu/CaltechAUTHORS:20160303-151944005
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'name': {'family': 'Prisbrey', 'given': 'Jeffrey E'}}]}
Year: 1996
DOI: 10.1016/0047-2727(95)01544-2
We report an experiment using a design that permits the direct measurement of individual decision rules in voluntary contribution games. We estimate the distribution of altruism in our subjects and find that observed 'overcontribution' is attributable to a combination of random variation in behavior and a few altruistic players. We also employ Andreoni's partners/strangers design to measure reputation effects. The only difference observed is that the strangers treatment produces slightly more random variation in behavior. Our results explain some anomalies about contribution rates, and support past findings that reputation-building plays a minor role in such experiments.https://authors.library.caltech.edu/records/0p4rx-1t397Economical experiments: Bayesian efficient experimental design
https://resolver.caltech.edu/CaltechAUTHORS:20160307-115100309
Authors: {'items': [{'id': 'El-Gamal-M', 'name': {'family': 'El-Gamal', 'given': 'Mahmoud'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1996
DOI: 10.1007/BF01803953
We propose and implement a Bayesian optimal design procedure. Our procedure takes as its primitives a class of parametric models of strategic behavior, a class of games (experimental designs), and priors on the behavioral parameters. We select the experimental design that maximizes the information from the experiment. We sequentially sample with the given design and models until only one of the models has viable posterior odds. A model which has low posterior odds in a small collection of models will have an even lower posterior odds when compared to a larger class, and hence we can dismiss it. The procedure can be used sequentially by introducing new models and comparing them to the models that survived earlier rounds of experiments. The emphasis is not on running as many experiments as possible, but rather on choosing experimental designs to distinguish between models in the shortest possible time period. We illustrate this procedure with a simple experimental game with one-sided incomplete information.https://authors.library.caltech.edu/records/33w0j-5pt77Endogeneity of Alternating Offers in a Bargaining Game
https://resolver.caltech.edu/CaltechAUTHORS:20160307-135947000
Authors: {'items': [{'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1997
DOI: 10.1006/jeth.1996.2225
We investigate an infinite horizon two-person simultaneous move bargaining game with incomplete information and discounted payoffs. The game takes the form of a concession game: in each period, each player chooses to give in or hold out. The game continues until at least one of the players chooses to give in, at which point agreement has been reached and the game terminates. For any discount factor, if the players' priors about each other's type are sufficiently asymmetric, there is a unique Nash equilibrium in which the two players alternate in their willingness to give in.https://authors.library.caltech.edu/records/065rb-z5s36Anomalous Behavior in Linear Public Goods Experiments: How Much and Why?
https://authors.library.caltech.edu/records/dm3cm-9f702
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Prisbrey-J-E', 'name': {'family': 'Prisbrey', 'given': 'Jeffrey E.'}}]}
Year: 1997
<p>We report the results of voluntary contributions experiments where subjects are randomly assigned different rates of return from their private consumption. These random assignments are changed round to round, enabling the measurement of individual player contribution rates as a function of that player's investment cost. We directly test these response functions for the presence of warm-glow and/or altruism effects. We find significant evidence for heterogeneous warm-glow effects that are, on average, low in magnitude. We statistically reject the presence of an altruism effect.</p>https://authors.library.caltech.edu/records/dm3cm-9f702Campaign Spending and Incumbency: An Alternative Simultaneous Equations Approach
https://resolver.caltech.edu/CaltechAUTHORS:20160303-115014859
Authors: {'items': [{'id': 'Erickson-R-S', 'name': {'family': 'Erickson', 'given': 'Robert S.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1998
DOI: 10.2307/2647913
This paper estimates the effects of incumbent spending and challenger spending in U.S. House elections in the 1970s and 1980s. The paper employs FIML simultaneous equations analysis involving instrumental variables as vote predictors, and zero-covariance restrictions for the vote-spending disturbances. This procedure allows the estimation of spending effects given plausible assumptions about the effects of unobserved causes of the vote on candidate spending. The results are that incumbent spending matters even with only modest amounts of simultaneity. Evidence is presented to suggest that the effectiveness of new incumbent spending declines with seniority but accumulates to the incumbent's long-term advantage.https://authors.library.caltech.edu/records/9k0p1-acx66Quantal Response Equilibria for Extensive Form Games
https://resolver.caltech.edu/CaltechAUTHORS:20151208-075113441
Authors: {'items': [{'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1998
DOI: 10.1023/A:1009905800005
This article investigates the use of standard econometric models for quantal choice to study equilibria of extensive form games. Players make choices based on a quantal-choice model and assume other players do so as well. We define an agent quantal response equilibrium (AQRE), which applies QRE to the agent normal form of an extensive form game and imposes a statistical version of sequential rationality. We also define a parametric specification, called logit-AQRE, in which quantal-choice probabilities are given by logit response functions. AQRE makes predictions that contradict the invariance principle in systematic ways. We show that these predictions match up with some experimental findings by Schotter et al. (1994) about the play of games that differ only with respect to inessential transformations of the extensive form. The logit-AQRE also implies a unique selection from the set of sequential equilibria in generic extensive form games. We examine data from signaling game experiments by Banks et al. (1994) and Brandts and Holt (1993). We find that the logit-AQRE selection applied to these games succeeds in predicting patterns of behavior observed in these experiments, even when our prediction conflicts with more standard equilibrium refinements, such as the intuitive criterion. We also reexamine data from the McKelvey and Palfrey (1992) centipede experiment and find that the AQRE model can account for behavior that had previously been explained in terms of altruistic behavior.https://authors.library.caltech.edu/records/hw9k9-c5996Efficiency and Voluntary Implementation in Markets with Repeated Pairwise Bargaining
https://resolver.caltech.edu/CaltechAUTHORS:20160307-163746656
Authors: {'items': [{'id': 'Jackson-Matthew-O', 'name': {'family': 'Jackson', 'given': 'Matthew O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1998
DOI: 10.2307/2999620
We examine a simple bargaining setting where heterogeneous buyers and sellers are repeatedly matched with each other. We begin by characterizing efficiency in such a dynamic setting, and discuss how it differs from efficiency in a centralized static setting. We then study the allocations which can result in equilibrium when the matched buyers and sellers bargain through some extensive game form. We take an implementation approach, characterizing the possible allocation rules which result as the extensive game form is varied. We are particularly concerned with the impact of making trade voluntary: imposing individual rationality on and off the equilibrium path. No buyer or seller consummates an agreement which leaves them worse off than the discounted expected value of their future rematching in the market. Finally, we compare and contrast the efficient allocations with those that could ever arise as the equilibria of some voluntary negotiation procedure.https://authors.library.caltech.edu/records/t2pyp-83k91A Characterization of Interim Efficiency with Public Goods
https://resolver.caltech.edu/CaltechAUTHORS:20160307-164134782
Authors: {'items': [{'id': 'Ledyard-J-O', 'name': {'family': 'Ledyard', 'given': 'John O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1999
DOI: 10.1111/1468-0262.00028
In this paper, we consider the following classical public goods problem. A group of individuals must decide on a level of public good that is produced according to constant returns to scale up to some capacity constraint. In addition to deciding the level of public good, the group must decide how to tax the individuals in the group in order to cover the cost. The distribution of the burden of taxation is important because different individuals have different marginal rates of substitution between the private good (taxes) and the public good, and may have different incomes as well. These individual marginal rates of substitution are private information; that is, each individual knows his or her own marginal rate of substitution, but not those of the other members of the group. Adopting a Bayesian mechanism design framework, we assume that the distribution of marginal rates of substitution is common knowledge.https://authors.library.caltech.edu/records/ws948-y7219Political Confederation
https://resolver.caltech.edu/CaltechAUTHORS:20160307-165058131
Authors: {'items': [{'id': 'Crémer-J', 'name': {'family': 'Crémer', 'given': 'Jacques'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1999
DOI: 10.2307/2585761
This article extends the spatial model of voting to study the implications of different institutional structures of federalism along two dimensions: degree of centralization and mode of representation. The representation dimension varies the weight between unit representation (one state, one vote) and population-proportional representation (one person, one vote). Voters have incomplete information and can reduce policy risk by increasing the degree of centralization or increasing the weight on unit representation. We derive induced preferences over the degree of centralization and the relative weights of the two modes of representation, and we study the properties of majority rule voting over these two basic dimensions of federalism. Moderates prefer more centralization than extremists, and voters in large states generally have different preferences from voters in small states. This implies two main axes of conflict in decisions concerning political confederation: moderates versus extremists and large versus small states.https://authors.library.caltech.edu/records/8v5vg-mn989Interim Efficiency in a Public Goods Problem
https://resolver.caltech.edu/CaltechAUTHORS:20160308-110828694
Authors: {'items': [{'id': 'Ledyard-J-O', 'name': {'family': 'Ledyard', 'given': 'John O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1999
DOI: 10.1111/1468-0262.00028
IN THIS PAPER, WE CONSIDER the following classical public goods problem. A group of individuals must decide on a level of a public good that is produced according to constant returns to scale up to some capacity constraint. In addition to deciding the level of public good, the group must decide how to tax the individuals in the group in order to cover the cost. The distribution of the burden of taxation is important because different individuals have different marginal rates of substitution between the private good taxes and the public good, and may have different incomes as well. These individual marginal rates of substitution are private information; that is, each individual knows his or her own marginal rate of substitution, but not those of the other members of the group. Adopting a Bayesian mechanism design framework, we assume that the distribution of marginal rates of substitution is common knowledge.https://authors.library.caltech.edu/records/s3es9-dad66An Experimental Study of Jury Decision Rules
https://resolver.caltech.edu/CaltechAUTHORS:20170825-071338534
Authors: {'items': [{'id': 'Guarnaschelli-S', 'name': {'family': 'Guarnaschelli', 'given': 'Serena'}}, {'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2000
DOI: 10.2307/2586020
We present experimental results on groups facing a decision problem analogous to that faced by a jury. We consider three treatment variables: group size (three or six), number of votes needed for conviction (majority or unanimity), and pre-vote deliberation. We find evidence of strategic voting under the unanimity rule: A large fraction of our subjects vote for a decision analogous to conviction even when their private information indicates a state analogous to innocence. This is roughly consistent with the game theoretic predictions of Feddersen and Pesendorfer. Although individual behavior is explained well by the game theoretic model, there are discrepancies at the level of the group decision. Contrary to Feddersen and Pesendorfer, in our experiments there are fewer outcomes analogous to incorrect convictions under unanimity rule than under majority rule. In the case of no deliberation, we simultaneously account for the individual and group data using quantal response equilibrium.https://authors.library.caltech.edu/records/12mhy-efy91The Effects of Payoff Magnitude and Heterogeneity on Behavior in 2x2 Games with Unique Mixed Strategy Equilibria
https://resolver.caltech.edu/CaltechAUTHORS:20160307-165356354
Authors: {'items': [{'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}, {'id': 'Weber-R-A', 'name': {'family': 'Weber', 'given': 'Roberto A.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2000
DOI: 10.1016/S0167-2681(00)00102-5
The Logit version of Quantal Response Equilibrium (QRE) predicts that equilibrium behavior in games will vary systematically with payoff magnitudes, if all other factors are held constant (including the Nash equilibria of the game). We explore this in the context of a set of asymmetric 2 x 2 games with unique totally mixed strategy equilibria. The data provide little support for the payoff magnitude predictions of the Logit Equilibrium model. We extend the theoretical QRE model to allow for heterogeneity, and find that the data fit the heterogeneous version of the theory significantly better.https://authors.library.caltech.edu/records/a9bgy-x3w36Equilibrium in Campaign Spending Games: Theory and Data
https://resolver.caltech.edu/CaltechAUTHORS:20160307-164353192
Authors: {'items': [{'id': 'Erikson-R-S', 'name': {'family': 'Erikson', 'given': 'Robert S.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2000
DOI: 10.2307/2585833
We present a formal game-theoretic model to explain the simultaneity problem that makes it difficult to obtain unbiased estimates of the effects of both incumbent and challenger spending in U.S. House elections. The model predicts a particular form of correlation between the expected closeness of the race and the level of spending by both candidates, which implies that the simultaneity problem should not be present in close races and should be progressively more severe in the range of safe races that are empirically observed. This is confirmed by comparing simple OLS regression of races that are expected to be close with races that are not, using House incumbent races spanning two decades.https://authors.library.caltech.edu/records/2jskv-g3260Equilibrium Effects in Campaign Spending Games: Theory and Data
https://resolver.caltech.edu/CaltechAUTHORS:20160314-165039438
Authors: {'items': [{'id': 'Erickson-R-S', 'name': {'family': 'Erickson', 'given': 'Robert S.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2000
DOI: 10.2307/2585833
We present a formal game-theoretic model to explain the simultaneity problem that makes it difficult to obtain unbiased estimates of the effects of both incumbent and challenger spending in U.S. House elections. The model predicts a particular form of correlation between the expected closeness of the race and the level of spending by both candidates, which implies that the simultaneity problem should not be present in close races and should be progressively more severe in the range of safe races that are empirically observed. This is confirmed by comparing simple OLS regression of races that are expected to be close with races that are not, using House incumbent races spanning two decades.https://authors.library.caltech.edu/records/qwmrw-57c95Federal mandates by popular demand
https://resolver.caltech.edu/CaltechAUTHORS:CREjpe00
Authors: {'items': [{'id': 'Crémer-J', 'name': {'family': 'Crémer', 'given': 'Jacques'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2000
This paper proposes a new framework for studying federal mandates regarding public policies in areas such as environmental quality, public health, highway safety, and the provision of local public goods. Voters have single-peaked preferences along a single policy dimension. There are two levels of government, federal and local. The federal level can constrain local policy by mandating a minimum (or maximum) policy. Localities are free to adopt any policy satisfying the constraint imposed by the federal mandate. We show that voters choose federal mandates that are too strict, which leads to excessively severe mandates. We show that similar results can obtain when federal provision of the public-provided good is more efficient than local provision.https://authors.library.caltech.edu/records/my2z7-6e445Voluntary Implementation
https://authors.library.caltech.edu/records/tdqc7-4ch58
Authors: {'items': [{'id': 'Jackson-Matthew-O', 'name': {'family': 'Jackson', 'given': 'Matthew O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}}]}
Year: 2001
We examine Nash implementation when individuals cannot be forced to accept the outcome of a mechanism. Two approaches are studied. The first approach is static where a state-contingent participation constraint defines an implicit mapping from rejected outcomes into outcomes that are individually rational. We call this voluntary implementation and show that the constrained Walrasian correspondence is not voluntarily implementable. The second approach is dynamic where a mechanism is replayed if the outcome at any stage is vetoed by one of the agents. We call this stationary implementation and show that if players discount the future in any way, then the constrained Walrasian correspondence is stationarily implementable.https://authors.library.caltech.edu/records/tdqc7-4ch58Voluntary Implementation
https://resolver.caltech.edu/CaltechAUTHORS:20160307-163541677
Authors: {'items': [{'id': 'Jackson-Matthew-O', 'name': {'family': 'Jackson', 'given': 'Matthew O.'}, 'orcid': '0000-0001-9846-4249'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2001
DOI: 10.1006/jeth.2000.2752
We examine Nash implementation when individuals cannot be forced to accept the outcome of a mechanism. Two approaches are studied. The first approach is static where a state-contingent participation constraint defines an implicit mapping from rejected outcomes into outcomes that are individually rational. We call this voluntary implementation and show that the constrained Walrasian correspondence is not voluntarily implementable. The second approach is dynamic where a mechanism is replayed if the outcome at any stage is vetoed by one of the agents. We call this stationary implementation and show that if players discount the future in any way, then the constrained Walrasian correspondence is stationarily implementable.https://authors.library.caltech.edu/records/y959x-0vz13The approximation of efficient public good mechanisms by simple voting schemes
https://resolver.caltech.edu/CaltechAUTHORS:20160303-152243404
Authors: {'items': [{'id': 'Ledyard-J-O', 'name': {'family': 'Ledyard', 'given': 'John O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1016/S0047-2727(00)00161-4
This paper compares the performance of simple voting rules, called referenda, to the performance of interim efficient mechanisms for the provision of a public good. In a referendum, voters simply vote for or against the provision of the public good, and production of the public good depends on whether or not the number of yes votes exceeds a prespecified threshold. Costs are shared equally. We show that in large populations for any interim efficient allocation rule, there exists a corresponding referendum that yields approximately the same total welfare when there are many individuals. Moreover, if there is a common value component to the voters' preferences, then there is a unique approximating referendum.https://authors.library.caltech.edu/records/qrk3b-cfk59Mixed Equilibrium in a Downsian Model with a Favored Candidate
https://resolver.caltech.edu/CaltechAUTHORS:20170808-084105843
Authors: {'items': [{'id': 'Aragones-E', 'name': {'family': 'Aragones', 'given': 'Enriqueta'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1006/jeth.2001.2821
This paper examines competition in the standard one-dimensional Downsian model of two-candidate elections, but where one candidate (A) enjoys an advantage over the other candidate (D). Voters' preferences are Euclidean, but any voter will vote for candidate A over candidate D unless D is closer to her ideal point by some fixed distance δ. The location of the median voter's ideal point is uncertain, and its distribution is commonly known by both candidates. The candidates simultaneously choose locations to maximize the probability of victory. Pure strategy equilibria often fail to exist in this model, except under special conditions about δ and the distribution of the median ideal point. We solve for the essentially unique symmetric mixed equilibrium with no-gaps, show that candidate A adopts more moderate policies than candidate D, and obtain some comparative statics results about the probability of victory and the expected distance between the two candidates' policies. We find that both players' equilibrium strategies converge to the expected median voter as A's advantage shrinks to 0.https://authors.library.caltech.edu/records/pjyy4-34w78Quantal Response Equilibrium and Overbidding in Private-Value Auctions
https://resolver.caltech.edu/CaltechAUTHORS:20170818-102832174
Authors: {'items': [{'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Holt-C-A', 'name': {'family': 'Holt', 'given': 'Charles A.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1006/jeth.2001.2914
This paper applies the quantal response equilibrium (QRE) model to study overbidding in private-values auctions. Experimental evidence shows that the prevalence of overbidding depends on the cost of overbidding relative to underbidding, as predicted theoretically. We use QRE as an error structure to estimate parameters of several competing models of overbidding. A QRE model based on risk averse bidders closely tracks the exact distribution of bids. The estimated parameters are significant and consistent across treatments.https://authors.library.caltech.edu/records/wqzg8-1a766Quantal Response Equilibrium and Overbidding in First Price Auctions
https://resolver.caltech.edu/CaltechAUTHORS:20160307-163302479
Authors: {'items': [{'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Holt-C-A', 'name': {'family': 'Holt', 'given': 'Charles A.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1006/jeth.2001.2914
This paper applies the quantal response equilibrium (QRE) model to study overbidding in private-values auctions. Experimental evidence shows that the prevalence of overbidding depends on the cost of overbidding relative to underbidding, as predicted theoretically. We use QRE as an error structure to estimate parameters of several competing models of overbidding. A QRE model based on risk averse bidders closely tracks the exact distribution of bids. The estimated parameters are significant and consistent across treatments.https://authors.library.caltech.edu/records/3eap1-p9697Efficient Equilibria in the Voluntary Contributions Mechanism with Private Information
https://resolver.caltech.edu/CaltechAUTHORS:20160308-110526874
Authors: {'items': [{'id': 'Laussel-D', 'name': {'family': 'Laussel', 'given': 'Didier'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1111/1467-9779.00143
We characterize generally the Bayesian Nash equilibria of a voluntary contributions public goods game for two consumers with private information.The two consumers simultaneously make voluntary contributions to the public good, and the contributions are refunded if the total falls short of the cost of the public good. Several families of equilibria (step-function, regular and semi-regular) are studied.
Necessary and sufficient conditions for regular and semi-regular equilibrium allocations to be interim incentive efficient are derived. In the uniform distribution case we prove (i) the existence of an open set of incentive efficient regular equilibria when the cost of production is large enough and (ii) the existence of an open set of incentive efficient semi-regular equilibria when the cost of production is low enough. Step-function equilibra are proved to be interim incentive inefficient.https://authors.library.caltech.edu/records/qvxss-0dh93Federal Mandates with Local Agenda Setters
https://resolver.caltech.edu/CaltechAUTHORS:20160308-103936514
Authors: {'items': [{'id': 'Crémer-J', 'name': {'family': 'Crémer', 'given': 'Jacques'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1007/s100580200078
This paper investigates the effect of local monopoly agenda setting on federal standards. Federal standards specify a minimum (or maximum) point in policy space which can be raised (or lowered) by local option. Without local agenda setters, this creates incentives for nonmajoritarian outcomes, with a tendency for policies to be too high (low). Local agenda setters may have incentives to distort these outcomes even further. We demonstrate that federal standards can counterbalance the distortions of local agenda setters.https://authors.library.caltech.edu/records/c8ctq-m3g76Corrigendum to "Voluntary implementation": J. Econ. Theor. 98 (2001) 1–25
https://resolver.caltech.edu/CaltechAUTHORS:20160307-135446668
Authors: {'items': [{'id': 'Jackson-Matthew-O', 'name': {'family': 'Jackson', 'given': 'Matthew O.'}, 'orcid': '0000-0001-9846-4249'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2003
DOI: 10.1016/S0022-0531(02)00032-7
We thank Mark Hahmeier for pointing out that there was an error (and several typographical errors) in our previous proof of Theorem 2.
The central change is simply an addition of the phrase "and z satisfies 2 in the definition of G-monotonicity" to the definition of D<sub>1</sub>. However, we include the complete proof below as this leads to a few corresponding changes in the remainder of the proof.https://authors.library.caltech.edu/records/nx78b-drv32Risk averse behavior in generalized matching pennies games
https://resolver.caltech.edu/CaltechAUTHORS:20160303-153844769
Authors: {'items': [{'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Holt-C-A', 'name': {'family': 'Holt', 'given': 'Charles A.'}}]}
Year: 2003
DOI: 10.1016/S0899-8256(03)00052-6
In experimental studies of behavior in 2×2 games with unique mixed strategy equilibria, observed choice frequencies are systematically different from mixed-strategy Nash predictions. This paper examines experimental results for a variety of such games, and shows that a structural econometric model which incorporates risk aversion into a quantal response equilibrium explains the data very well. Moreover, risk aversion estimates are stable across the different games and are close to those obtained from laboratory and field auction data, as well as from individual lottery choice experiments.https://authors.library.caltech.edu/records/6j1bh-a5t69The effect of candidate quality on electoral equilibrium: An experimental study
https://resolver.caltech.edu/CaltechAUTHORS:ARAapsr04
Authors: {'items': [{'id': 'Aragones-E', 'name': {'family': 'Aragones', 'given': 'Enriqueta'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2004
DOI: 10.1017/S0003055404001017
When two candidates of different quality compete in a one-dimensional policy space, the equilibrium outcomes are asymmetric and do not correspond to the median. There are three main effects. First, the better candidate adopts more centrist policies than the worse candidate. Second, the equilibrium is statistical, in the sense that it predicts a probability distribution of outcomes rather than a single degenerate outcome. Third, the equilibrium varies systematically with the level of uncertainty about the location of the median voter. We test these three predictions using laboratory experiments and find strong support for all three. We also observe some biases and show that they can be explained by quantal response equilibrium.https://authors.library.caltech.edu/records/4yjym-wf080Special Issue of Games and Economic Behavior in honor of Richard D. McKelvey
https://resolver.caltech.edu/CaltechAUTHORS:20160303-153559651
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2005
DOI: 10.1016/j.geb.2005.02.002
Richard D. McKelvey died on April 22, 2002, at the age of 57, and the social sciences
lost a great scholar. He will be especially missed by fellow game theorists and academics
who use game theory in their scholarly studies of economic and political institutions and
behavior. His students, colleagues, and friends will also miss a very humble and thoughtful
human being who unselfishly contributed his time and intellectual energies throughout his
career. He influenced the careers of many of us, and worked hard for many organizations
and journals, this journal in particular.https://authors.library.caltech.edu/records/2404e-cbf26An experimental comparison of collective choice procedures for excludable public goods
https://resolver.caltech.edu/CaltechAUTHORS:20160303-152530163
Authors: {'items': [{'id': 'Gailmard-S', 'name': {'family': 'Gailmard', 'given': 'Sean'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2005
DOI: 10.1016/j.jpubeco.2003.04.002
This paper compares three collective choice procedures for the provision of excludable public goods under incomplete information. One, serial cost sharing (SCS), is budget balanced, individually rational, anonymous and strategy proof. The other two are "hybrid" procedures: voluntary cost sharing with proportional rebates (PCS) and with no rebates (NR). PCS satisfies all these properties except strategy proofness, and NR satisfies all the properties except for strategy proofness and budget balance. However, PCS and NR do not exclude any potential users, and they do not require equal cost shares, thereby overcoming the two main sources of inefficiency with SCS. We characterize the Bayesian Nash equilibria (BNE) of the hybrid mechanisms and conduct laboratory experiments to compare the performance of the three mechanisms. We find that PCS produces significantly more efficient allocations than either SCS or NR.https://authors.library.caltech.edu/records/npd3n-yec30Regular Quantal Response Equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20160303-161253717
Authors: {'items': [{'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Holt-C-A', 'name': {'family': 'Holt', 'given': 'Charles A.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2005
DOI: 10.1007/s10683-005-5374-7
The structural Quantal Response Equilibrium (QRE) generalizes the Nash equilibrium by augmenting payoffs with random elements that are not removed in some limit. This approach has been widely used both as a theoretical framework to study comparative statics of games and as an econometric framework to analyze experimental and field data. The framework of structural QRE is flexible: it can be applied to arbitrary finite games and incorporate very general error structures. Restrictions on the error structure are needed, however, to place testable restrictions on the data (Haile et al., 2004). This paper proposes a reduced-form approach, based on quantal response functions that replace the best-response functions underlying the Nash equilibrium. We define a regular QRE as a fixed point of quantal response functions that satisfies four axioms: continuity, interiority, responsiveness, and monotonicity. We show that these conditions are not vacuous and demonstrate with an example that they imply economically sensible restrictions on data consistent with laboratory observations. The reduced-form approach allows for a richer set of regular quantal response functions, which has proven useful for estimation purposes.https://authors.library.caltech.edu/records/ykpch-54d69Social learning with private and common values
https://resolver.caltech.edu/CaltechAUTHORS:20160303-161520590
Authors: {'items': [{'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rogers-B-W', 'name': {'family': 'Rogers', 'given': 'Brian W.'}}]}
Year: 2006
DOI: 10.1007/s00199-005-0642-5
We consider an environment where individuals sequentially choose among several actions. The payoff to an individual depends on her action choice, the state of the world, and an idiosyncratic, privately observed preference shock. Under weak conditions, as the number of individuals increases, the sequence of choices always reveals the state of the world. This contrasts with the familiar result for pure common-value environments where the state is never learned, resulting in herds or informational cascades. The medium run dynamics to convergence can be very complex and non-monotone: posterior beliefs may be concentrated on a wrong state for a long time, shifting suddenly to the correct state.https://authors.library.caltech.edu/records/hdy68-k3q30An experimental study of storeable votes
https://resolver.caltech.edu/CaltechAUTHORS:20160303-155659114
Authors: {'items': [{'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}, {'id': 'Gelman-Andrew', 'name': {'family': 'Gelman', 'given': 'Andrew'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2006
DOI: 10.1016/j.geb.2006.04.004
The storable votes mechanism is a voting method for committees that meet periodically to consider a series of binary decisions. Each member is allocated a fixed budget of votes to be cast as desired over the sequence of decisions. This provides incentives for voters to spend more votes on those decisions that matter to them more, typically generating welfare gains over standard majority voting with non-storable votes. Equilibrium strategies have a very intuitive feature—the number of votes cast must be monotonic in the voter's intensity of preferences—but are otherwise difficult to calculate, raising questions of practical implementation. We present experimental data where realized efficiency levels were remarkably close to theoretical equilibrium predictions, while subjects adopted monotonic but off-equilibrium strategies. We are led to conclude that concerns about the complexity of the game may have limited practical relevance.https://authors.library.caltech.edu/records/bhr3d-2tm85An equilibrium voting model of federal standards with externalities
https://resolver.caltech.edu/CaltechAUTHORS:20160303-153001927
Authors: {'items': [{'id': 'Crémer-J', 'name': {'family': 'Crémer', 'given': 'Jacques'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2006
DOI: 10.1016/j.jpubeco.2006.04.002
This paper proposes a framework for studying policy making in a federal system in the presence of spillover externalities. Local jurisdictions choose local policies by majority rule subject to standards that are set by majority rule at the federal level.We characterize the induced preferences of voters for federal policies, prove existence of local majority rule equilibrium, provide an example of non-existence of global majority rule equilibrium, and explore the welfare properties of federal standards in the presence of spillovers.https://authors.library.caltech.edu/records/nc9kb-7gy59Storeable Votes: Giving Voice to Minority Preferences Without Sacrificing Efficiency
https://resolver.caltech.edu/CaltechAUTHORS:20160303-150115736
Authors: {'items': [{'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Riezman-R-G', 'name': {'family': 'Riezman', 'given': 'Raymond'}}]}
Year: 2007
[Introduction] The principle of majority rule is the foundation of
democratic constitutions, but provides an immediate
and fundamental challenge to the legitimacy of
any government that the constitution empowers: the
risk of excluding minority groups from representation.
At least since Madison, Mill, and Tocqueville, political
thinkers have argued that a necessary condition for
the legitimacy of a democratic system is for no group
with socially acceptable goals to be disenfranchised. In
the history of constitutional law, ensuring fair representation
to each group is seen as the crucial second
step in the evolution of democratic institutions, after
granting the franchise: once all individuals are guaranteed
the right to participate in the political process, the
problem remains how to assign appropriate weights to
each group's political interest.The core of the difficulty
is that the two goals seem inherently contradictory.https://authors.library.caltech.edu/records/w1whz-p7j12The Paradox of Voter Participation? A Laboratory Study
https://resolver.caltech.edu/CaltechAUTHORS:20160303-145732549
Authors: {'items': [{'id': 'Levine-D-K', 'name': {'family': 'Levine', 'given': 'David K.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2007
DOI: 10.1017/S0003055407070013
It is widely believed that rational choice theory is grossly inconsistent with empirical observations about voter turnout. We report the results of an experiment designed to test the voter turnout predictions of the rational choice Palfrey–Rosenthal model of participation with asymmetric information. We find that the three main comparative statics predictions are observed in the data: the size effect, whereby turnout goes down in larger electorates; the competition effect, whereby turnout is higher in elections that are expected to be close; and the underdog effect, whereby voters supporting the less popular alternative have higher turnout rates. We also compare the quantitative magnitudes of turnout to the predictions of Nash equilibrium. We find that there is undervoting for small electorates and overvoting for large electorates, relative to Nash equilibrium. These deviations from Nash equilibrium are consistent with the logit version of Quantal Response Equilibrium, which provides a good fit to the data, and can also account for significant voter turnout in very large elections.https://authors.library.caltech.edu/records/xvbdj-pzt37A general characterization of interim efficient mechanisms for independent linear environments
https://resolver.caltech.edu/CaltechAUTHORS:20100924-090411858
Authors: {'items': [{'id': 'Ledyard-J-O', 'name': {'family': 'Ledyard', 'given': 'John O.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2007
DOI: 10.1016/j.jet.2005.12.006
We consider the class of Bayesian environments with independent types, and utility functions which are both quasi-linear in a private good and linear in a one-dimensional private-value type parameter. We call these independent linear environments. For these environments, we fully characterize interim efficient allocation rules which satisfy interim incentive compatibility and interim individual rationality constraints. We also prove that they correspond to decision rules based on virtual surplus maximization, together with the appropriate incentive taxes. We illustrate these techniques with applications to auction design and public good provision.https://authors.library.caltech.edu/records/p1ac3-63b20Political Reputations and Campaign Promises
https://resolver.caltech.edu/CaltechAUTHORS:20160303-150824425
Authors: {'items': [{'id': 'Aragones-E', 'name': {'family': 'Aragones', 'given': 'Enriqueta'}}, {'id': 'Postlewaite-A', 'name': {'family': 'Postlewaite', 'given': 'Andrew'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2007
DOI: 10.1162/JEEA.2007.5.4.846
We analyze conditions under which candidates' reputations may affect voters' beliefs over what policy will be implemented by the winning candidate of an election. We develop a model of repeated elections with complete information in which candidates are purely ideological. We analyze an equilibrium in which voters' strategies involve a credible threat to punish candidates who renege on their campaign promises and in which all campaign promises are believed by voters and honored by candidates. We characterize the maximal credible campaign promises and find that the degree to which promises are credible in equilibrium is an increasing function of the value of a candidate's reputation.https://authors.library.caltech.edu/records/km9wh-x8f07Self-Correcting Information Cascades
https://resolver.caltech.edu/CaltechAUTHORS:20160303-144825827
Authors: {'items': [{'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rogers-B-W', 'name': {'family': 'Rogers', 'given': 'Brian W.'}}, {'id': 'McKelvey-R-D', 'name': {'family': 'McKelvey', 'given': 'Richard D.'}}]}
Year: 2007
DOI: 10.1111/j.1467-937X.2007.00438.x
We report experimental results from long sequences of decisions in environments that are theoretically prone to severe information cascades. Observed behaviour is much different—information cascades are ephemeral. We study the implications of a theoretical model based on quantal response equilibrium, in which the observed cascade formation/collapse/formation cycles arise as equilibrium phenomena. Consecutive cascades may reverse states, and usually such a reversal is self-correcting: the cascade switches to the correct state. These implications are supported by the data. We extend the model to allow for base rate neglect and find strong evidence for overweighting of private information. The estimated belief trajectories indicate fast and efficient learning dynamics.https://authors.library.caltech.edu/records/nwyfz-mrq04Efficiency, Equity, and Timing of Voting Mechanisms
https://resolver.caltech.edu/CaltechAUTHORS:BATapsr07
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Morton-R', 'name': {'family': 'Morton', 'given': 'Rebecca'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2007
DOI: 10.1017/S0003055407070281
We compare the behavior of voters under simultaneous and sequential voting rules when voting is costly and information is incomplete. In many political institutions, ranging from small committees to mass elections, voting is sequential, which allows some voters to know the choices of earlier voters. For a stylized model, we generate a variety of predictions about the relative efficiency and participation equity of these two systems, which we test using controlled laboratory experiments. Most of the qualitative predictions are supported by the data, but there are significant departures from the predicted equilibrium strategies, in both the sequential and the simultaneous voting games. We find a tradeoff between information aggregation, efficiency, and equity in sequential voting: a sequential voting rule aggregates information better than simultaneous voting and is more efficient in some information environments, but sequential voting is inequitable because early voters bear more participation costs.https://authors.library.caltech.edu/records/5yfk6-b7s74Information Aggregation in Standing and Ad Hoc Committees
https://resolver.caltech.edu/CaltechAUTHORS:ALIaer08
Authors: {'items': [{'id': 'Ali-S-N', 'name': {'family': 'Ali', 'given': 'S. Nageeb'}}, {'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Kartik-N', 'name': {'family': 'Kartik', 'given': 'Navin'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2008
DOI: 10.1257/aer.98.2.181
[No abstract]https://authors.library.caltech.edu/records/5wbqa-ghk95Information Aggregation and Strategic Abstention in Large Laboratory Elections
https://resolver.caltech.edu/CaltechAUTHORS:BATaer08
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Morton-R', 'name': {'family': 'Morton', 'given': 'Rebecca'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2008
DOI: 10.1257/aer.98.2.194
[No abstract]https://authors.library.caltech.edu/records/axcbw-rqt44Endogenous entry and self-selection in private value auctions: An experimental study
https://resolver.caltech.edu/CaltechAUTHORS:20160303-150527129
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Pevnitskaya-S', 'name': {'family': 'Pevnitskaya', 'given': 'Svetlana'}}]}
Year: 2008
DOI: 10.1016/j.jebo.2006.06.005
This paper presents the results of an experimental study of endogenous entry in first-price independent private value auctions. N potential bidders simultaneously decide whether to participate in an auction or receive a known outside option. In the second stage, entrants submit bids after learning their own private values and the number of entrants. An equilibrium model of heterogeneous risk averse bidders implies a self-selection effect, where bidding in the auction is lower with endogenous entry because only less risk averse bidders enter. This effect is confirmed by the experiment. We also observe excessive entry relative to the theoretical model.https://authors.library.caltech.edu/records/qfje3-qxb25Minorities and Storable Votes
https://resolver.caltech.edu/CaltechAUTHORS:20160301-142311084
Authors: {'items': [{'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Riezman-R-G', 'name': {'family': 'Riezman', 'given': 'Raymond'}}]}
Year: 2008
DOI: 10.1561/100.00007048
The paper studies a simple voting system that can increase the power of minorities without sacrificing aggregate efficiency or treating voters asymmetrically. Storable votes grant each voter a stock of votes to spend as desired over a series of binary decisions and thus elicit voters' strength of preferences. The potential of the mechanism is particularly clear in the presence of systematic minorities: by accumulating votes on issues that it deems most important, the minority can win occasionally. But because the majority typically can outvote it, the minority wins only if its strength of preference is high and the majority's strength of preference is low. The result is that the minority's preferences are represented, while aggregate efficiency either falls little or in fact rises, relative to simple majority voting. The theoretical predictions of our model are confirmed by a series of experiments: the frequency of minority victories, the relative payoff of the minority versus the majority, and the aggregate payoffs all match the theory.https://authors.library.caltech.edu/records/9pvsf-f2n31The Compromise Game: Two-Sided Adverse Selection in the Laboratory
https://resolver.caltech.edu/CaltechAUTHORS:20160301-141738273
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Carrillo-J-D', 'name': {'family': 'Carrillo', 'given': 'Juan D.'}}]}
Year: 2009
DOI: 10.1257/mic.1.1.151
We analyze a game of two-sided private information where players have privately known "strengths" and can decide to fight or compromise. If either chooses to fight, the stronger player receives a high payoff and the weaker player receives a low payoff. If both choose to compromise, each player receives an intermediate payoff. The only equilibrium is for players to always fight. In our experiment, we observe frequent compromise, more fighting the lower the compromise payoff and less fighting by first than second movers. We explore several theories of cognitive limitations in an attempt to understand these anomalous findings.https://authors.library.caltech.edu/records/cwy93-b7b71Laboratory Experiments in Political Economy
https://resolver.caltech.edu/CaltechAUTHORS:20160301-140245830
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2009
DOI: 10.1146/annurev.polisci.12.091007.122139
This article summarizes a small part of the literature on laboratory experiments in political economy. The experiments discussed are primarily aimed at testing predictions of equilibrium models of voting in committees and elections. The specific topics discussed are voter turnout, the Condorcet jury theorem, and the swing voter's curse. The latter two topics address questions of information aggregation by voting rules. All the experiments find significant evidence of strategic voting and, with a few exceptions, find support for the equilibrium predictions of the theories.https://authors.library.caltech.edu/records/1hj74-m4b33Heterogeneous quantal response equilibrium and cognitive hierarchies
https://resolver.caltech.edu/CaltechAUTHORS:20090808-142501869
Authors: {'items': [{'id': 'Rogers-B-W', 'name': {'family': 'Rogers', 'given': 'Brian W.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Camerer-C-F', 'name': {'family': 'Camerer', 'given': 'Colin F.'}, 'orcid': '0000-0003-4049-1871'}]}
Year: 2009
DOI: 10.1016/j.jet.2008.11.010
We explore an equilibrium model of games where behavior is given by logit response functions, but payoff responsiveness and beliefs about others' responsiveness are heterogeneous. We study two substantively different ways of extending quantal response equilibrium (QRE) to this setting: (1) Heterogeneus QRE, where players share identical correct beliefs about the distribution of payoff responsiveness; and (2) Truncated QRE, where players have downward looking beliefs, systematically underestimating others' responsiveness. We show that the cognitive hierarchy model is a special case of Truncated QRE. We conduct experiments designed to differentiate these approaches. We find significant evidence of payoff responsive stochastic choice, and of heterogeneity and downward looking beliefs in some games.https://authors.library.caltech.edu/records/pjqqy-wbb96On Eliciting Beliefs in Strategic Games
https://resolver.caltech.edu/CaltechAUTHORS:20160301-140744431
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Wang-Stephanie-W', 'name': {'family': 'Wang', 'given': 'Stephanie W.'}}]}
Year: 2009
DOI: 10.1016/j.jebo.2009.03.025
Several recent studies in experimental economics have tried to measure beliefs of subjects engaged in strategic games with other subjects. Using data from one such study we
conduct an experiment where our experienced subjects observe early rounds of strategy choices from that study and are given monetary incentives to report forecasts of choices in later rounds. We elicit beliefs using three different scoring rules: linear, logarithmic, and quadratic. We compare forecasts across the scoring rules and compare the forecasts of our trained observers to forecasts of the actual players in the original experiment. We find significant differences across scoring rules. The improper linear scoring rule produces forecasts closer to 0 and 1 than the proper rules, and these forecasts are poorly calibrated. The two proper scoring rules induce significantly different distributions of forecasts. We find that forecasts by observers under both proper scoring rules are significantly different from the forecasts of the actual players, in terms of accuracy, calibration, and the distribution of forecasts. We also find evidence for belief convergence among the observers.https://authors.library.caltech.edu/records/a9078-85e62The Swing Voter's Curse in the Laboratory
https://resolver.caltech.edu/CaltechAUTHORS:20180813-091037247
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Morton-R-B', 'name': {'family': 'Morton', 'given': 'Rebecca B.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2010
DOI: 10.1111/j.1467-937x.2009.00569.x
This paper reports the first laboratory study of the swing voter's curse and provides insights on the larger theoretical and empirical literature on "pivotal voter" models. Our experiment controls for different information levels of voters, as well as the size of the electorate, the distribution of preferences and other theoretically relevant parameters. The design varies the share of partisan voters and the prior belief about a payoff relevant state of the world. Our results support the equilibrium predictions of the Feddersen-Pesendorfer model. The voters act as if they are aware of the swing voter's curse and adjust their behaviour to compensate. While the compensation is not complete and there is some heterogeneity in individual behaviour, we find that aggregate outcomes, such as efficiency, turnout and margin of victory, closely track the theoretical predictions.https://authors.library.caltech.edu/records/xe2yp-srd47The Swing Voter's Curse in the
Laboratory
https://resolver.caltech.edu/CaltechAUTHORS:20100518-113824373
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Morton-R-B', 'name': {'family': 'Morton', 'given': 'Rebecca B.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2010
DOI: 10.1111/j.1467-937X.2009.00569.x
This paper reports the first laboratory study of the swing voter's curse and provides insights on the larger theoretical and empirical literature on "pivotal voter" models. Our experiment controls for different information levels of voters, as well as the size of the electorate, the distribution of preferences and other theoretically relevant parameters. The design varies the share of partisan voters and the prior belief about a payoff relevant state of the world. Our results support the equilibrium predictions of the Feddersen–Pesendorfer model. The voters act as if they are aware of the swing voter's curse and adjust their behaviour to compensate. While the compensation is not complete and there is some heterogeneity in individual behaviour, we find that aggregate outcomes, such as efficiency, turnout and margin of victory, closely track the theoretical predictions.https://authors.library.caltech.edu/records/nhrae-21a57No trade
https://resolver.caltech.edu/CaltechAUTHORS:20110725-093131929
Authors: {'items': [{'id': 'Carrillo-J-D', 'name': {'family': 'Carrillo', 'given': 'Juan D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2011
DOI: 10.1016/j.geb.2010.09.006
We investigate a common value bilateral bargaining model with two-sided private information and no aggregate uncertainty. A seller owns an asset whose common valuation is a deterministic function of the two traders' private signals. We first establish a no-trade theorem for this environment, and proceed to study the effect of the asset valuation structure and the trading mechanism on extent to which asymmetric information induces individuals to engage in mutually unprofitable exchange. A laboratory experiment is conducted, where trade is found to occur between 19% and 35% of the time, and this depends in systematic ways on both the asset valuation function and the trading mechanism. Both buyers and sellers adapt their strategy to changes in the asset valuation function and to changes in the trading mechanism in clearly identifiable ways. An equilibrium model with naïve belief formation accounts for some of the behavioral findings, but open questions remain.https://authors.library.caltech.edu/records/xankz-aaw23Network architecture, salience and coordination
https://resolver.caltech.edu/CaltechAUTHORS:20120228-105149483
Authors: {'items': [{'id': 'Choi-S', 'name': {'family': 'Choi', 'given': 'Syngjoo'}}, {'id': 'Gale-D', 'name': {'family': 'Gale', 'given': 'Douglas'}}, {'id': 'Kariv-S', 'name': {'family': 'Kariv', 'given': 'Shachar'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2011
DOI: 10.1016/j.geb.2011.01.001
This paper reports the results of an experimental investigation of dynamic games in networks. In each period, the subjects simultaneously choose whether or not to make an irreversible contribution to the provision of an indivisible public good. Subjects observe the past actions of other subjects if and only if they are connected by the network. Networks may be incomplete so subjects are asymmetrically informed about the actions of other subjects in the same network, which is typically an obstacle to the attainment of an efficient outcome. For all networks, the game has a large set of (possibly inefficient) equilibrium outcomes. Nonetheless, the network architecture makes certain strategies salient and this in turn facilitates coordination on efficient outcomes. In particular, asymmetries in the network architecture encourage two salient behaviors, strategic delay and strategic commitment. By contrast, we find that symmetries in the network architecture can lead to mis-coordination and inefficient outcomes.https://authors.library.caltech.edu/records/pwztg-a7b92The dynamics of distributive politics
https://resolver.caltech.edu/CaltechAUTHORS:20120907-150828156
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2012
DOI: 10.1007/s00199-011-0612-z
We study dynamic committee bargaining over an infinite horizon with discounting. In each period, a committee proposal is generated by a random recognition rule, the committee chooses between the proposal and a status quo by majority rule, and the voting outcome in period t becomes the status quo in period t + 1. We study symmetric Markov equilibria of the resulting game and conduct an experiment to test hypotheses generated by the theory for pure distributional (divide-the-dollar) environments. In particular, we investigate the effects of concavity in the utility functions, the existence of a Condorcet winning alternative, and the discount factor (committee "impatience"). We report several new findings. Voting behavior is selfish and myopic. Status quo outcomes have great inertia. There are strong treatment effects that are in the direction predicted by the Markov equilibrium. We find significant evidence of concave utility functions.https://authors.library.caltech.edu/records/5k06b-qcv20Legislative Bargaining and the Dynamics of Public Investment
https://resolver.caltech.edu/CaltechAUTHORS:20130102-092329553
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Nunnari-S', 'name': {'family': 'Nunnari', 'given': 'Salvatore'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2012
DOI: 10.1017/S0003055412000160
We present a legislative bargaining model of the provision of a durable public good over an infinite horizon. In each period, there is a societal endowment that can either be invested in the public good or consumed. We characterize the optimal public policy, defined by the time path of investment and consumption. In a legislature representatives of each of n districts bargain over the current period's endowment for investment in the public good and transfers to each district. We analyze the Markov perfect equilibrium under different voting q-rules where q is the number of yes votes required for passage. We show that the efficiency of the public policy is increasing in q because higher q leads to higher investment in the public good and less pork. We examine the theoretical equilibrium predictions by conducting a laboratory experiment with five-person committees that compares three alternative voting rules: unanimity (q = 5), majority (q = 3), and dictatorship (q = 1).https://authors.library.caltech.edu/records/ynpfb-08w68Competitive Equilibrium in Markets for Votes
https://resolver.caltech.edu/CaltechAUTHORS:20130116-093012236
Authors: {'items': [{'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}, {'id': 'Llorente-Saguer-A', 'name': {'family': 'Llorente-Saguer', 'given': 'Aniol'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2012
DOI: 10.1086/667988
We develop a competitive equilibrium theory of a market for votes. Before voting on a binary issue, individuals may buy and sell their votes with each other. We define the concept of ex ante vote-trading equilibrium and show by construction that an equilibrium exists. The equilibrium we characterize always results in dictatorship if there is any trade, and the market for votes generates welfare losses, relative to simple majority voting, if the committee is large enough or the distribution of values is not very skewed. We test the theoretical implications in the laboratory using a continuous open-book multiunit double auction.https://authors.library.caltech.edu/records/127az-a4p78Speculative Overpricing in Asset Markets With Information Flows
https://resolver.caltech.edu/CaltechAUTHORS:20121026-080755730
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Wang-Stephanie-W', 'name': {'family': 'Wang', 'given': 'Stephanie W.'}}]}
Year: 2012
DOI: 10.3982/ECTA8781
In this paper, we derive and experimentally test a theoretical model of speculation in multiperiod asset markets with public information flows. The speculation arises from the traders' heterogeneous posteriors as they make different inferences from sequences of public information. This leads to overpricing in the sense that price exceeds the most optimistic belief about the real value of the asset. We find evidence of speculative overpricing in both incomplete and complete markets, where the information flow is a gradually revealed sequence of imperfect public signals about the state of the world. We also find evidence of asymmetric price reaction to good news and bad news, another feature of equilibrium price dynamics under our model. Markets with a relaxed short-sale constraint exhibit less overpricing.https://authors.library.caltech.edu/records/ms16y-k2023Information gatekeepers: theory and experimental evidence
https://resolver.caltech.edu/CaltechAUTHORS:20121205-095756144
Authors: {'items': [{'id': 'Brocas-I', 'name': {'family': 'Brocas', 'given': 'Isabelle'}}, {'id': 'Carrillo-J-D', 'name': {'family': 'Carrillo', 'given': 'Juan D.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2012
DOI: 10.1007/s00199-011-0615-9
We consider a model where two adversaries can spend resources in acquiring
public information about the unknown state of the world in order to influence the
choice of a decision maker. We characterize the sampling strategies of the adversaries
in the equilibrium of the game.We show that as the cost of information acquisition for
one adversary increases, that person collects less evidence whereas the other adversary
collects more evidence. We then test the results in a controlled laboratory setting.
The behavior of subjects is close to the theoretical predictions. Mistakes are relatively infrequent (15%). They occur in both directions, with a higher rate of over-sampling
(39%) than under-sampling (8%). The main difference with the theory is the smooth
decline in sampling around the theoretical equilibrium. Comparative statics are also
consistent with the theory, with adversaries sampling more when their own cost is low
and when the other adversary's cost is high. Finally, there is little evidence of learning
over the 40 matches of the experiment.https://authors.library.caltech.edu/records/j9jph-gxb66Candidate Entry and Political Polarization: An Antimedian Voter Theorem
https://resolver.caltech.edu/CaltechAUTHORS:20140203-071145621
Authors: {'items': [{'id': 'Großer-J', 'name': {'family': 'Großer', 'given': 'Jens'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2014
DOI: 10.1111/ajps.12032
We study a citizen-candidate-entry model with private information about ideal points. We fully characterize the unique symmetric equilibrium of the entry game and show that only relatively "extreme" citizen types enter the electoral competition as candidates, whereas more "moderate" types never enter. It generally leads to substantial political polarization, even when the electorate is not polarized and citizens understand that they vote for more extreme candidates. We show that polarization increases in the costs of entry and decreases in the benefits from holding office. Moreover, when the number of citizens goes to infinity, only the very most extreme citizens, with ideal points at the boundary of the policy space, become candidates. Finally, our polarization result is robust to changes in the implementation of a default policy if no citizen runs for office and to introducing directional information about candidates' types that is revealed via parties.https://authors.library.caltech.edu/records/4xhb4-6p797Turnout and Power Sharing
https://resolver.caltech.edu/CaltechAUTHORS:20140401-162743341
Authors: {'items': [{'id': 'Herrera-H', 'name': {'family': 'Herrera', 'given': 'Helios'}}, {'id': 'Morelli-M', 'name': {'family': 'Morelli', 'given': 'Massimo'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2014
DOI: 10.1111/ecoj.12116
We compare turnout under proportional power-sharing electoral systems and winner-take-all elections. The effect of such institutional differences on turnout depends on the distribution of voter preferences. If the two parties have relatively equal support, turnout is higher in a winner-take-all system; the result is reversed when there is a clear underdog. We report findings from a laboratory experiment that was designed and conducted to explore this theoretical hypothesis and several other secondary hypotheses that are also implied by the theoretical model. The results are broadly supportive of the theoretical predictions on comparative turnout, the partial underdog compensation effect and the competition effect.https://authors.library.caltech.edu/records/j9aef-tp594Vote trading with and without party leaders
https://resolver.caltech.edu/CaltechAUTHORS:20140609-100018522
Authors: {'items': [{'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Turban-Sébastien', 'name': {'family': 'Turban', 'given': 'Sébastien'}}]}
Year: 2014
DOI: 10.1016/j.jpubeco.2014.01.001
Two groups of voters of known sizes disagree over a single binary decision to be taken by simple majority. Individuals have different, privately observed intensities of preferences and before voting can buy or sell votes among themselves for money. We study, theoretically and experimentally, the implication of such trading for outcomes and welfare when trades are coordinated by the two group leaders and when they take place anonymously in a competitive market. The theory has strong predictions. In both cases, trading falls short of full efficiency, but for opposite reasons: with group leaders, the minority wins too rarely; with market trades, the minority wins too often. As a result, with group leaders, vote trading improves over no-trade; with market trades, vote trading can be welfare reducing. The theoretical predictions are strongly supported by the experimental data.https://authors.library.caltech.edu/records/gyn9j-xg312Dynamic Free Riding with Irreversible Investments
https://resolver.caltech.edu/CaltechAUTHORS:20141009-095955387
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Nunnari-S', 'name': {'family': 'Nunnari', 'given': 'Salvatore'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2014
DOI: 10.1257/aer.104.9.2858
We study the Markov equilibria of a model of free riding in which n infinitely lived agents choose between private consumption and irreversible contributions to a durable public good. We show that the set of equilibrium steady states converges to a unique point as depreciation converges to zero. For any level of depreciation, moreover, the highest steady state converges to the efficient level as agents become increasingly patient. These results are in contrast to the case with reversible investments, where a continuum of inefficient equilibrium steady states exists for any level of depreciation, discount factor and size of population.https://authors.library.caltech.edu/records/xydx8-fb989Symmetric play in repeated allocation games
https://resolver.caltech.edu/CaltechAUTHORS:20150212-121723022
Authors: {'items': [{'id': 'Kusmics-C', 'name': {'family': 'Kusmics', 'given': 'Christoph'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rogers-B-W', 'name': {'family': 'Rogers', 'given': 'Brian W.'}}]}
Year: 2014
DOI: 10.1016/j.jet.2014.08.002
We study symmetric play in a class of repeated games when players are patient. We show that, while the use of symmetric strategy profiles essentially does not restrict the set of feasible payoffs, the set of equilibrium payoffs is an interesting proper subset of the feasible and individually rational set. We also provide a theory of how rational individuals play these games, identifying particular strategies as focal through the considerations of Pareto optimality and simplicity. We report experiments that support many aspects of this theory.https://authors.library.caltech.edu/records/gby0y-c7b46Equilibrium tax rates and income redistribution: A laboratory study
https://resolver.caltech.edu/CaltechAUTHORS:20151210-103521591
Authors: {'items': [{'id': 'Agranov-M', 'name': {'family': 'Agranov', 'given': 'Marina'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2015
DOI: 10.1016/j.jpubeco.2015.08.008
This paper reports results from a laboratory experiment that investigates the Meltzer–Richard model of equilibrium tax rates, inequality, and income redistribution. The experiment varies the amount of wage inequality and the political process used to determine tax rates. We find that higher inequality leads to higher tax rates; the effect is significant and large in magnitude. The tax rates and labor supply functions are both quantitatively close to the theory. The result is robust to the political institution. The theoretical model of Meltzer–Richard is extended to incorporate social preferences in the form of altruism and inequity aversion, which are found to have negligible effects in the data.https://authors.library.caltech.edu/records/pb9xv-kyb69Quantal response and nonequilibrium beliefs explain overbidding in maximum-value auctions
https://resolver.caltech.edu/CaltechAUTHORS:20160930-133028251
Authors: {'items': [{'id': 'Camerer-C-F', 'name': {'family': 'Camerer', 'given': 'Colin'}, 'orcid': '0000-0003-4049-1871'}, {'id': 'Nunnari-S', 'name': {'family': 'Nunnari', 'given': 'Salvatore'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2016
DOI: 10.1016/j.geb.2016.06.009
We report new experimental data on a simple common value auction to investigate the extent to which bidding can be explained by logit QRE, in combination with different models about bidder beliefs: cursed equilibrium, level-k, and cognitive hierarchy. There is a close correspondence between the predicted bidding patterns in those models and the distribution of observed bids. The pattern of median bids in the data consists of a combination of overbidding with low signals, and near-value-bidding with higher signals. Logit QRE with heterogeneous bidders approximates this pattern. Combining QRE with any of the other models of belief formation leads to a closer match with the data. All the estimated models predict only small treatment effects across different versions of the game, consistent with the data. We also reanalyze an earlier dataset for the same game (Ivanov et al., 2010), which exhibited much more overbidding, and reach similar qualitative conclusions.https://authors.library.caltech.edu/records/ad0xw-6et65The Dynamic Free Rider Problem: A Laboratory Study
https://resolver.caltech.edu/CaltechAUTHORS:20161202-123810870
Authors: {'items': [{'id': 'Battaglini-M', 'name': {'family': 'Battaglini', 'given': 'Marco'}}, {'id': 'Nunnari-S', 'name': {'family': 'Nunnari', 'given': 'Salvatore'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2016
DOI: 10.1257/mic.20150126
We report the results of an experiment that investigates free riding in the accumulation of durable public goods. We consider economies with reversibility, where contributions can be positive or negative; and economies with irreversibility, where contributions are nonnegative. Aggregate outcomes support the qualitative predictions of the Markov Perfect Equilibria (MPE) characterized in Battaglini, Nunnari, and Palfrey (2014): steady state levels of public good are lower with reversibility than irreversibility; accumulation is inefficiently slow; and the public good is under-provided in both regimes. On the other hand, public good levels are higher than MPE, and some evidence of history dependence is detected.https://authors.library.caltech.edu/records/28rv2-mwe55Static and dynamic underinvestment: An experimental investigation
https://resolver.caltech.edu/CaltechAUTHORS:20161116-152246560
Authors: {'items': [{'id': 'Agranov-M', 'name': {'family': 'Agranov', 'given': 'Marina'}}, {'id': 'Fréchette-G', 'name': {'family': 'Fréchette', 'given': 'Guillaume'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Vespa-E', 'name': {'family': 'Vespa', 'given': 'Emanuel'}}]}
Year: 2016
DOI: 10.1016/j.jpubeco.2016.09.001
In this paper, we analyze a stylized version of an environment with public goods, dynamic linkages, and legislative bargaining. Our theoretical framework studies the provision of a durable public good as a modified two-period version of Battaglini et al. (2012). The experimental design allows us to disentangle inefficiencies that would result in a one-shot world (static inefficiencies) from additional inefficiencies that emerge in an environment in which decisions in the present affect future periods (dynamic inefficiencies). We solve the first-best solution and compare it to the symmetric stationary subgame-perfect equilibrium of a legislative bargaining game. The experimental results indicate that subjects do react to dynamic linkages, and, as such, there is evidence of both static and dynamic inefficiencies. The quantitative predictions of the bargaining model with respect to the share of dynamic inefficiencies are closest to the data when dynamic linkages are high. To the extent that behavior is different from the model's predictions, a systematic pattern emerges — namely, the use of strategic cooperation, whereby groups increase the efficiency of current proposals by selectively punishing, in future proposals, individuals who propose highly inefficient allocations.https://authors.library.caltech.edu/records/jsxnt-kf137How cheap talk enhances efficiency in threshold public goods games
https://resolver.caltech.edu/CaltechAUTHORS:20170418-110358624
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Rosenthal-H', 'name': {'family': 'Rosenthal', 'given': 'Howard'}}, {'id': 'Roy-N', 'name': {'family': 'Roy', 'given': 'Nilanjan'}}]}
Year: 2017
DOI: 10.1016/j.geb.2015.10.004
This paper uses a Bayesian mechanism design approach to investigate the effects of communication in a threshold public goods game. Individuals have private information about contribution costs. Individuals can each make a discrete contribution. If the number of contributors is at least equal to the threshold, a public benefit accrues to all members of the group. We experimentally implement three different communication structures prior to the decision move: (a) simultaneous exchange of binary messages, (b) larger finite numerical message space and (c) unrestricted text chat. We obtain theoretical bounds on the efficiency gains that are obtainable under these different communication structures. In an experiment with three person groups and a threshold of two, we observe significant efficiency gains only with the richest of these communication structures, where participants engage in unrestricted text chatting. In that case, the efficiency bounds implied by mechanism design theory are achieved.https://authors.library.caltech.edu/records/cspes-h3572External validation of voter turnout models by concealed parameter recovery
https://resolver.caltech.edu/CaltechAUTHORS:20180801-164035934
Authors: {'items': [{'id': 'Merlo-Antonio', 'name': {'family': 'Merlo', 'given': 'Antonio'}, 'orcid': '0000-0002-4047-5604'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2018
DOI: 10.1007/s11127-018-0523-7
We conduct a model validation analysis of several behavioral models of voter turnout, using laboratory data. We call our method of model validation concealed parameter recovery, where estimation of a model is done under a veil of ignorance about some of the experimentally controlled parameters—in this case voting costs. We use quantal response equilibrium as the underlying, common structure for estimation, and estimate models of instrumental voting, altruistic voting, expressive voting, and ethical voting. All the models except the ethical voting model recover the concealed parameters reasonably well. We also report the results of a counterfactual analysis based on the recovered parameters, to compare the policy implications of the different models about the cost of a subsidy to increase turnout.https://authors.library.caltech.edu/records/5jp7k-14k74Communication Among Voters Benefits the Majority Party
https://resolver.caltech.edu/CaltechAUTHORS:20190418-081954322
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Pogorelskiy-K', 'name': {'family': 'Pogorelskiy', 'given': 'Kirill'}, 'orcid': '0000-0002-3426-5870'}]}
Year: 2019
DOI: 10.1111/ecoj.12563
How does communication among voters affect turnout? In a laboratory experiment, subjects, divided into two competing parties, choose between costly voting and abstaining. Pre-play communication treatments, relative to the no communication control, are public communication (subjects exchange public messages through computers) and party communication (messages are public within one's own party). Communication benefits the majority party by increasing its turnout margin, hence its winning probability. Party communication increases turnout; public communication decreases total turnout with a low voting cost. With communication, there is no support for Nash equilibrium and limited consistency with correlated equilibrium.https://authors.library.caltech.edu/records/x2cyv-c1m38Candidate Entry and Political Polarization: An Experimental Study
https://resolver.caltech.edu/CaltechAUTHORS:20190228-143118586
Authors: {'items': [{'id': 'Großer-J', 'name': {'family': 'Großer', 'given': 'Jens'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2019
DOI: 10.1017/S0003055418000631
We report the results of a laboratory experiment based on a citizen–candidate model with private information about ideal points. Inefficient political polarization is observed in all treatments; that is, citizens with extreme ideal points enter as candidates more often than moderate citizens. Second, less entry occurs, with even greater polarization, when voters have directional information about candidates' ideal points, using ideological party labels. Nonetheless, this directional information is welfare enhancing because the inefficiency from greater polarization is outweighed by lower entry expenses and better voter information. Third, entry rates are decreasing in group size and the entry cost. These findings are all implied by properties of the unique symmetric Bayesian equilibrium cutpoint pair of the entry game. Quantitatively, we observe too little (too much) entry when the theoretical entry rates are high (low). This general pattern of observed biases in entry rates is implied by logit quantal response equilibrium.https://authors.library.caltech.edu/records/kta3n-khs35Trading Votes for Votes. A Dynamic Theory
https://resolver.caltech.edu/CaltechAUTHORS:20190410-153818170
Authors: {'items': [{'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2019
DOI: 10.3982/ecta15940
We develop a framework to study the dynamics of vote trading over multiple binary issues. We prove that there always exists a stable allocation of votes that is reachable in a finite number of trades, for any number of voters and issues, any separable preference profile, and any restrictions on the coalitions that may form. If at every step all blocking trades are chosen with positive probability, convergence to a stable allocation occurs in finite time with probability 1. If coalitions are unrestricted, the outcome of vote trading must be Pareto optimal, but unless there are three voters or two issues, it need not correspond to the Condorcet winner.https://authors.library.caltech.edu/records/m8x89-14p64Effects of Income Mobility and Tax Persistence on Income Redistribution and Inequality
https://resolver.caltech.edu/CaltechAUTHORS:20200124-151122461
Authors: {'items': [{'id': 'Agranov-M', 'name': {'family': 'Agranov', 'given': 'Marina'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2020
DOI: 10.1016/j.euroecorev.2020.103372
We conduct a controlled laboratory experiment to explore the effect of income mobility and tax persistence on equilibrium tax rates and inequality. The theoretical framework of the experiment captures the essential elements of the prospect of upward mobility (POUM) hypothesis in a two-period model and characterizes the dynamic equilibrium tax rates. The experiment allows for a clean test of causality between income mobility and redistributive taxes. Outcomes observed in the experiment are mostly consistent with the comparative static predictions of the model. Mobility and stickiness of taxes lead to lower tax rates, but neither is sufficient by itself. When tax rates are persistent, mobility has a significant negative effect on median implemented taxes. An increase in tax persistence decreases tax rates and increases inequality when mobility is present. An increase in mobility decreases inequality but the effect is modest and not statistically significant.https://authors.library.caltech.edu/records/nps2y-bdz37Ignorance and bias in collective decisions
https://resolver.caltech.edu/CaltechAUTHORS:20171208-140248447
Authors: {'items': [{'id': 'Elbittar-A', 'name': {'family': 'Elbittar', 'given': 'Alexander'}}, {'id': 'Gomberg-A', 'name': {'family': 'Gomberg', 'given': 'Andrei'}}, {'id': 'Martinelli-C', 'name': {'family': 'Martinelli', 'given': 'César'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2020
DOI: 10.1016/j.jebo.2016.12.011
We study theoretically and experimentally committee decision making with common interests. Committee members do not know which of two alternatives is optimal, but each member can acquire a private costly signal before casting a vote under either majority or unanimity rule. In the experiment, as predicted by Bayesian equilibrium, voters are more likely to acquire information under majority rule, and vote strategically under unanimity rule. As opposed to Bayesian equilibrium predictions, however, many committee members vote when uninformed. Moreover, uninformed voting is strongly associated with a lower propensity to acquire information. We show that an equilibrium model of subjective prior beliefs can account for both these phenomena, and provides a good overall fit to the observed patterns of behavior both in terms of rational ignorance and biases.https://authors.library.caltech.edu/records/d23xp-92h88Political Economy of Public Debt: A Laboratory Study
https://resolver.caltech.edu/CaltechAUTHORS:20201218-135643046
Authors: {'items': [{'id': 'Battaglini-Marco', 'name': {'family': 'Battaglini', 'given': 'Marco'}, 'orcid': '0000-0001-9690-0721'}, {'id': 'Nunnari-Salvatore', 'name': {'family': 'Nunnari', 'given': 'Salvatore'}, 'orcid': '0000-0002-1525-798X'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2020
DOI: 10.1093/jeea/jvz031
This paper reports the results from a laboratory experiment designed to study political distortions in the accumulation of public debt. A legislature bargains over the levels of a public good and of district specific transfers in two periods. The legislature can issue or purchase risk-free bonds in the first period and the level of public debt creates a dynamic linkage across policymaking periods. In line with the theoretical predictions, we find that public policies are inefficient and efficiency is increasing in the size of the majority requirement, with higher investment in public goods and lower debt associated with larger majority requirements. Debt is lower when the probability of a negative shock to the economy in the second period is higher indicating that even in a political equilibrium debt is used to smooth consumption and to insure against economic uncertainty. Also in line with the theoretical predictions, we find that dynamic distortions are eliminated when the first period proposer can commit to a policy for both periods. The experiment, however, highlights two phenomena that are surprising in terms of standard theory and have not been previously documented. First, balancing the budget in each period is a focal point, leading to lower distortions than predicted. Second, higher majority requirements induce significant delays in reaching an agreement.https://authors.library.caltech.edu/records/8ye41-ffr15Trading Votes for Votes: A Laboratory Study
https://resolver.caltech.edu/CaltechAUTHORS:20201104-143445798
Authors: {'items': [{'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2021
DOI: 10.1016/j.geb.2020.10.004
Vote trading is ubiquitous in committees and legislatures, and yet we know very little about its properties. We explore this subject with a laboratory experiment. We propose a model of vote trading in which pairs of voters exchange votes whenever doing so is mutually advantageous. The resulting trading dynamics always converge to stable vote allocations–allocations where no further improving trades exist. The data show that stability has predictive power: vote allocations in the lab converge towards stable allocations, and individual vote holdings at the end of trading are in line with theoretical predictions. There is less support for the finer details of the trade-by-trade dynamics.https://authors.library.caltech.edu/records/hq4xs-gzh17Games Played by Teams of Players
https://resolver.caltech.edu/CaltechAUTHORS:20230103-818063100.37
Authors: {'items': [{'id': 'Kim-Jeongbin', 'name': {'family': 'Kim', 'given': 'Jeongbin'}, 'orcid': '0000-0003-1440-8691'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Zeidel-Jeffrey-R', 'name': {'family': 'Zeidel', 'given': 'Jeffrey R.'}}]}
Year: 2022
DOI: 10.1257/mic.20200391
We develop a general framework for analyzing games where each player is a team and members of the same team all receive the same payoff. The framework combines noncooperative game theory with collective choice theory, and is developed for both strategic form and extensive form games. We introduce the concept of team equilibrium and identify conditions under which it converges to Nash equilibrium with large teams. We identify conditions on collective choice rules such that team decisions are stochastically optimal: the probability the team chooses an action is increasing in its equilibrium expected payoff. The theory is illustrated with some binary action games.https://authors.library.caltech.edu/records/ddvkd-77s15