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A Caltech Library Repository Feedhttp://www.rssboard.org/rss-specificationpython-feedgenenSat, 13 Apr 2024 01:42:35 +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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/7scf6-kk935An Experimental Examination of Auction Mechanisms for Discrete Public Goods
https://resolver.caltech.edu/CaltechAUTHORS:20160303-095511103
Authors: {'items': [{'id': 'Ferejohn-J-A', 'name': {'family': 'Ferejohn', 'given': 'John A.'}}, {'id': 'Forsythe-R', 'name': {'family': 'Forsythe', 'given': 'Robert'}, 'orcid': '0000-0002-5821-1519'}, {'id': 'Noll-R-G', 'name': {'family': 'Noll', 'given': 'Roger G.'}, 'orcid': '0000-0001-9012-3773'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1982
[Introduction] In previous research (Ferejohn et al., 1976, 1977, 1979a, 1979b) we have addressed the problem of designing well-behaved choice mechanisms for simultaneously purchasing more than one discrete public good from among several independent alternatives. A "discrete public good" is a public good which is provided in a single, fixed quantity. The initial example that motivated our work (see Ferejohn et al., 1976) was the selection of roughly 30 television programs of fixed duration and content from more than 100 programs that were proposed to public television stations. Several other examples are equally germane, such as the selection of research proposals to be supported by a foundation or the decision by partners in a joint oil exploration venture as to the tracts in a field on which to bid. In practice, most collective decisions are posed as a choice among discrete alternatives to simplify the selection process. See Ferejohn et al. (1979b) for more examples.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/3zzda-eb698Asset 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/44mbw-bbf34Buyer Behavior and the Welfare Effects of Bundling by a Multiproduct Monopolists: A Laboratory Test
https://resolver.caltech.edu/CaltechAUTHORS:20160303-114452846
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1985
[Introduction] This paper reports the findings of a laboratory test of a number of predictions derived from modern auction theory. The primary focus is on the efficiency and distributional consequences of the common practice of selling a variety of different items in "lots" or "bundles." Recent developments in auction theory allow one to make rather sharp predictions about how allocations are affected by the way the seller chooses to package different items together to form lots. By replicating the environment specified by the model very accurately in controlled laboratory auctions, these predictions are tested. The data are found to provide strong support for many of the theoretical propositions.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/3799s-vd653Uncertainty 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/hqk88-pks14An Experimental Study of Warranty Coverage and Dispute Resolution in Competitive Markets
https://resolver.caltech.edu/CaltechAUTHORS:20160303-111052470
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Romer-T', 'name': {'family': 'Romer', 'given': 'T.'}}]}
Year: 1986
In service and product markets where warranties are offered, disputes over warranty performance frequently occur between buyer and seller. Resolving such disputes in a fair and effective way has become an increasingly important and controversial question in recent years. Some observers have gone so far as to argue that the pervasiveness of such disputes and the inability to resolve them effectively is having a corrosive effect on society.1 This is probably somewhat extreme, but even a less excited perspective suggests that the design of procedures to handle consumer disputes is a matter for serious concern.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/dfx2v-ara79Private 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/pbhnm-wbh37A mathematical proof of Duverger's Law
https://resolver.caltech.edu/CaltechAUTHORS:20171109-143351276
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1989
DOI: 10.3998/mpub.12284
[No abstract]https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/6wtem-h3j68Implementation 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/jcpzw-mkr13An Experimental Study of the Centipede Game
https://resolver.caltech.edu/CaltechAUTHORS:20160405-154023040
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: 1991
We report on a series of experiments 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 a.s 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 ta.king increasing as the pile gets larger. vVe investigate how well a version of this model explains the data observed in the centipede experiments.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/n6131-v8q36Testing game-theoretic models of free riding: New evidence on probability bias and learning
https://resolver.caltech.edu/CaltechAUTHORS:20171130-140418477
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
[No abstract]https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/vxkts-dfm67Efficient 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.eduhttps://authors.library.caltech.edu/records/y6cyq-m7s94Implementation in Bayesian equilibrium: The multiple equilibrium problem in mechanism design
https://resolver.caltech.edu/CaltechAUTHORS:20171108-153653525
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 1992
Implementation theory links together social choice theory and game theory. At a less abstract level, its application provides an approach to welfare economics based on individual incentives. The underlying motivation for implementation theory is most easily seen from the point of view of a relatively uninformed planner who wishes to optimize a social welfare function that depends on environmental parameters about which relevant information is scattered around in the economy. Thus, the planner wishes to both collect as much of this relevant information as possible, and, with this information, make a social decision (e.g., an allocation of resources). This is the classic problem identified by Hurwicz (1972). In the twenty years since, we find numerous research agendas falling into the general category of implementation problems: the study of planning procedures, contracts, optimal regulation and taxation, agency relationships, agendas and committee decision-making, comparative electoral systems, non-cooperative foundations of general equilibrium theory, and even much of the recent theoretical work in accounting and the economics of law.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/wm8ee-q5t63An 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/4vgsv-k4922The Holdout Game: An Experimental Study of an Infinitely Repeated Game with Two-Sided Incomplete Information
https://resolver.caltech.edu/CaltechAUTHORS:20160308-113638069
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
This paper investigates a two-person infinitely repeated game of incomplete information in which both players have private information on their individual type before the first game is played; this initial private information is followed by an infinite sequence if identical simultaneous-move stage games. Players observe their own payoff and the other player's move after each stage game has been played. Payoffs in the game are given by the discounted sum of payoffs in all the stage games.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/cknck-sac32Introduction [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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/y959x-0vz13Implementation theory
https://resolver.caltech.edu/CaltechAUTHORS:20170822-111047935
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1016/S1574-0005(02)03024-2
This chapter surveys the branch of implementation theory initiated by Maskin (1999). Results for both complete and incomplete information environments are covered.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/09wz0-82w58Implementation theory
https://resolver.caltech.edu/CaltechAUTHORS:20170822-111047935
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2002
DOI: 10.1016/S1574-0005(02)03024-2
This chapter surveys the branch of implementation theory initiated by Maskin (1999). Results for both complete and incomplete information environments are covered.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/rzwd0-cnq31The 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/4yjym-wf080Electoral Competition Between Two Candidates of Different Quality: The Effects of Candidate Ideology and Private Information
https://resolver.caltech.edu/CaltechAUTHORS:20160308-114044999
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Aragones-E', 'name': {'family': 'Aragones', 'given': 'Enriqueta'}}]}
Year: 2005
DOI: 10.1007/3-540-27295-X_4
This paper examines competition in a spatial model of two-candidate elections, where one candidate enjoys a quality advantage over the other candidate. The candidates care about winning and also have policy preferences. There is two-dimensional private information. Candidate ideal points as well as their tradeoffs between policy preferences and winning are private information. The distribution of this two-dimensional type is common knowledge. The location of the median voter's ideal point is uncertain, with a distribution that is commonly known by both candidates. Pure strategy equilibria always exist in this model. We characterize the effects of increased uncertainty about the median voter, the effect of candidate policy preferences, and the effects of changes in the distribution of private information. We prove that the distribution of candidate policies approaches the mixed equilibrium of Aragones and Palfrey [2], when both candidates' weights on policy preferences go to zero.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/1bdmv-0en72Special 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/5yfk6-b7s74Quantal Response Equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20160308-114418045
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: 2008
DOI: 10.1057/9780230226203.1372
A quantal response specifies choice probabilities that are smooth, increasing functions of expected payoffs. A quantal response equilibrium has the property that the choice distributions match the belief distributions used to calculate expected payoffs. This stochastic generalization of the Nash equilibrium provides strong empirical restrictions that are generally consistent with data from laboratory experiments with human subjects. We define the concept of regular quantal response equilibrium and discuss several applications from the recent literature.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/amxdh-6vw23Information 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/pjqqy-wbb96A Citizen Candidate Model with Private Information and Unique Equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20160301-142744314
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: 2009
[Introduction] We study a citizen candidate model with private information about the candidates' preferred policies (or, ideal points). By contrast, in the seminal models of Osborne and Slivinski (OS 1996) and Besley and Coate (BC 1997), and most citizen candidate models that have followed, the candidates'ideal points are assumed to be common knowledge. In the baseline model, a community is about to elect a new leader to implement a policy decision. Each citizen may enter the electoral competition as a candidate at some commonly known cost. Because each candidate's preferred policy is public information, she cannot credible promise any other than this policy in case of being elected. Anticipating this, citizens prefer the candidate whose ideal point is closest to their own ideal point, possibly themselves. OS assume a continuum of citizens (i.e., potential candidates) and sincere voting. That is, citizens vote for the most preferred candidate. BC assume a finite number of citizens and strategic voting (i.e., a Nash equilibrium in undominated strategies for the voting game). They identify a variety of different kinds of equilibria supporting different numbers of entrants, and show how the set of equilibria depends on the distribution of ideal points as well as the entry costs and benefits from holding office. For most environments, there are multiple equilibria. Both median and non-median policy outcomes can be supported in equilibrium.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/x8qe1-ks254On 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.eduhttps://authors.library.caltech.edu/records/a9078-85e62Information Gatekeepers: Theory and Experimental Evidence
https://resolver.caltech.edu/CaltechAUTHORS:20170726-170755087
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: 2009
DOI: 10.7907/n9sr9-wbh87
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 more 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.eduhttps://authors.library.caltech.edu/records/n9sr9-wbh87The 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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/nhrae-21a57Political Institutions and the Dynamics of Investment
https://resolver.caltech.edu/CaltechAUTHORS:20170726-162558894
Authors: {'items': [{'id': 'Battaglia-M', 'name': {'family': 'Battaglia', '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: 2010
DOI: 10.7907/0s53y-9sr42
We present a theoretical model of the provision of a durable public good over an infinite horizon. In each period, there is a societal endowment of which each of n districts owns a share. This endowment can either be invested in the public good or consumed. We characterize the planner's optimal solution and time path of investment and consumption. We then consider alternative political mechanisms for deciding on the time path, and analyze the Markov perfect equilibrium of these mechanisms. One class of these mechanisms involves a legislature where representatives of each district bargain with each other to decide how to divide the current period's societal endowment between investment in the public good and transfers to each district. The second class of mechanisms involves the districts making independent decisions for how to divide their own share of the endowment between consumption and investment. We conduct an experiment to assess the performance of these mechanisms, and compare the observed allocations to the Markov perfect equilibrium.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/0s53y-9sr42Competitive Equilibrium in Markets for Votes
https://resolver.caltech.edu/CaltechAUTHORS:20100924-163224980
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: 2010
DOI: 10.7907/7qftr-6q446
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 definne ex ante
vote-trading equilibrium, identify weak sufficient conditions for existence, and construct one such equilibrium. We show that this equilibrium must always result in dictatorship and the market generates welfare losses, relative to simple majority voting, if the committee is large enough. We test the theoretical implications by implementing a competitive vote market in the laboratory using a continuous open-book multi-unit double auction.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/7qftr-6q446No 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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/5k06b-qcv20Speculative Overpricing in Asset Markets with Information Flows
https://resolver.caltech.edu/CaltechAUTHORS:20170726-172615506
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: 10.7907/370gk-wbz86
In this paper, we derive and experimentally test a theoretical model of speculation in multi-period 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.eduhttps://authors.library.caltech.edu/records/370gk-wbz86Legislative 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/pb9xv-kyb69Experiments in political economy
https://resolver.caltech.edu/CaltechAUTHORS:20171208-141853344
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2016
[No abstract]https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/mjqph-q9187Trading Votes for Votes. A Decentralized Matching Algorithm
https://resolver.caltech.edu/CaltechAUTHORS:20160301-115651807
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: 2016
DOI: 10.3386/w21645
Vote-trading is common practice in committees and group decision-making. Yet we know very little about its properties. Inspired by the similarity between the logic
of sequential rounds of pairwise vote-trading and matching algorithms, we explore three central questions that have parallels in the matching literature: (1) Does a stable allocation of votes always exists? (2) Is it reachable through a decentralized algorithm? (3) What welfare properties does it possess? We prove that a stable allocation exists and is always reached in a finite number of trades, for any number of voters and issues, for any separable preferences, and for any rule on how trades are prioritized. Its welfare properties however are guaranteed to be desirable only under specific conditions. A laboratory experiment confirms that stability has predictive
power on the vote allocation achieved via sequential pairwise trades, but lends only weak support to the dynamic algorithm itself.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/ff5m0-2mm63The Political Economy of Public Debt: A Laboratory Study
https://resolver.caltech.edu/CaltechAUTHORS:20160301-115133535
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: 10.7907/fbzrt-67w98
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. Also in line with the theory, we find that debt is lower when the probability of a negative shock to the economy in the second period is higher, evidence that legislators use debt to smooth consumption. The experiment also highlights two phenomena that are not predicted by standard theories and have not been previously documented. First, balancing the budget in each period appears to be a focal point for some legislators, leading to lower distortions than predicted. Second, higher majority requirements induce significant delays in reaching an agreement.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/fbzrt-67w98The Dynamic Free Rider Problem: A Laboratory Study
https://resolver.caltech.edu/CaltechAUTHORS:20160301-135235371
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: 10.7907/5wr2k-ph607
We report the results from an experiment designed explicitly to study the Markov Perfect Equilibrium (MPE) dynamics of free riding behavior in the accumulation of a durable public good. We consider two cases: economies with reversibility (RIE), where the agents can either increase or decrease the accumulated stock; and economies with irreversibility (IIE), where contributions are non-negative. Our findings support the key qualitative prediction of MPE: IIE converges to an accumulated level of public good that is an order of magnitude higher than RIE. We also find that the accumulation path is inefficiently slow in both RIE and IIE, and the public good is significantly under-provided.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/5wr2k-ph607Quantal Response and Nonequilibrium Beliefs Explain Overbidding in Maximum-Value Auctions
https://resolver.caltech.edu/CaltechAUTHORS:20160301-134857624
Authors: {'items': [{'id': 'Camerer-C-F', 'name': {'family': 'Camerer', 'given': 'Colin F.'}, '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: 10.7907/pr9cf-1xg79
We report an experiment on a simple common value auction to investigate the extent to which bidding can be explained by quantal response equilibrium, in combination with different
assumptions about the structure of bidder beliefs|the cursed equilibrium model and models that posit levels of strategic sophistication. Using a structural estimation approach, we find a close correspondence between the theoretical predictions of those models and experimental
behavior. The basic pattern of average bids in the data consists of a combination of overbidding for low signals, and value-bidding for higher signals. The logit QRE model with heterogeneous bidders fits this pattern reasonably well. Combining quantal response with either cursed beliefs (CE-QRE) or a level-k of strategic sophistication (LK-QRE, CH-QRE) leads to a close match with the data. All these variations on quantal response models predict minimal differences of average bidding behavior across different versions of the game, consistent with the experimental
findings. Finally, we reanalyze data from an earlier experiment on the same auction by Ivanov, Levin and Niederle (2010). While their data exhibit much more variance compared with ours, nonetheless, we still find that these models also fit their data reasonably well, even in the presence of extreme overbidding observed in that experiment. Overall, our study indicates that the winner curse phenomenon in this auction is plausibly attributable to limits on strategic thinking combined with quantal response.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/pr9cf-1xg79Ignorance and Bias in Collective Decisions
https://resolver.caltech.edu/CaltechAUTHORS:20160301-133946961
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': 'Cesar'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2016
DOI: 10.7907/6fx75-j5292
We study theoretically and experimentally a committee with common interests. Committee members do not know which of two alternatives is the best, but each member can acquire
privately a 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 attempt to counter the bias in favor of one alternative 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.eduhttps://authors.library.caltech.edu/records/6fx75-j5292How Cheap Talk Enhances Efficiency in Public Goods Games
https://resolver.caltech.edu/CaltechAUTHORS:20160301-120023499
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'}}, {'id': 'Roy-Nilanjan', 'name': {'family': 'Roy', 'given': 'Nilanjan'}}]}
Year: 2016
DOI: 10.7907/99d56-9zp69
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. If at least some fraction of the group make a discrete contribution, 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.eduhttps://authors.library.caltech.edu/records/99d56-9zp69External Validation of Voter Turnout Models by Concealed Parameter Recovery
https://resolver.caltech.edu/CaltechAUTHORS:20160301-134313074
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: 2016
DOI: 10.7907/x0b0n-1k851
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 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.eduhttps://authors.library.caltech.edu/records/x0b0n-1k851Static and Dynamic Underinvestment: an Experimental Investigation
https://resolver.caltech.edu/CaltechAUTHORS:20160229-144613925
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'}, {'id': 'Frechette-G', 'name': {'family': 'Frechette', 'given': 'Guillaume'}}, {'id': 'Vespa-E', 'name': {'family': 'Vespa', 'given': 'Emanuel'}}]}
Year: 2016
DOI: 10.7907/dv3vt-ztf54
In this paper we design 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 version of Battaglini et al. (2012). We develop an experimental design that allows us to disentangle inefficiencies that would result in a one-shot world (static inefficiencies) from extra inefficiencies that emerge in an environment in which decisions in the present affect the future (dynamic inefficiencies). We solve for efficiency and also characterize the bargaining equilibrium, a symmetric stationary subgame-perfect equilibrium, which is the most common concept used in applied work. The experimental results indicate that subjects do react to dynamic linkages and, as such, we find evidence of both static and dynamic inefficiencies.
In fact, the quantitative predictions of the 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 what is predicted by the model, a systematic pattern emerges, namely the use of strategic cooperation whereby subjects increase the efficiency of period one proposals by selectively punishing, in period two, subjects who did not propose efficient allocations.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/dv3vt-ztf54Political Reputations and Campaign Promises
https://resolver.caltech.edu/CaltechAUTHORS:20160314-151357281
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'}, {'id': 'Postlewaite-A', 'name': {'family': 'Postlewaite', 'given': 'Andrew'}}]}
Year: 2016
DOI: 10.7907/fkwdm-vm028
We analyze conditions under which candidates' reputations may affect the beliefs of the voters 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 of their campaign promises, and all campaign promises are believed by voters, and honored by candidates. We characterize the maximal credible campaign promises and obtain 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.eduhttps://authors.library.caltech.edu/records/fkwdm-vm028Voting and Lottery Drafts as Efficient Public Goods Mechanisms
https://resolver.caltech.edu/CaltechAUTHORS:20160328-160830650
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: 2016
DOI: 10.7907/x8d9n-q6988
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 costsharing
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.eduhttps://authors.library.caltech.edu/records/x8d9n-q6988Quantal 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/cspes-h3572The Effects of Income Mobility and Tax Persistence on Income Redistribution and Inequality
https://resolver.caltech.edu/CaltechAUTHORS:20170707-111918164
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: 2017
DOI: 10.7907/15m59-zva74
We explore the effect of income mobility and the persistence of redistributive tax policy on the level of redistribution in democratic societies. An infinite-horizon theoretical model is developed, and the properties of the equilibrium tax rate and the degree of after-tax inequality are characterized. Mobility and stickiness of tax policy are both negatively related to the equilibrium tax rate. However, neither is sufficient by itself. Social mobility has no effect on equilibrium taxes if tax policy is voted on in every period, and tax persistence has no effect in the absence of social mobility. The two forces are complementary. Tax persistence leads to higher levels of post-tax inequality, for any amount of mobility. The effect of mobility on inequality is less clear-cut and depends on the degree of tax persistence. A laboratory experiment is conducted to test the main comparative static predictions of the theory, and the results are generally supportive.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/15m59-zva74Candidate entry and political polarization: An experimental study
https://resolver.caltech.edu/CaltechAUTHORS:20170707-100521521
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: 2017
DOI: 10.7907/92153-cfm32
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 total entry costs 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 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.eduhttps://authors.library.caltech.edu/records/92153-cfm32Communication Among Voters Benefits the Majority Party
https://resolver.caltech.edu/CaltechAUTHORS:20170725-105126699
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: 2017
DOI: 10.7907/33gtv-w8n81
How does communication among voters affect turnout? And who benefits from it? In a laboratory experiment in which subjects, divided into two competing parties, choose between costly voting and abstaining, we study three pre-play communication treatments: No Communication, a control; Public Communication, where all voters exchange public messages through computer chat; and Party Communication, where messages are also exchanged but only within one's own party. Our main finding is that communication always benefits the majority party by increasing its expected turnout margin and, hence, its expected margin of victory and probability of winning the election. Party communication increases overall turnout, while public communication increases turnout with a high voting cost but decreases it with a low voting cost. With communication, we find essentially no support for the standard Nash equilibrium predictions and limited consistency with correlated equilibrium.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/33gtv-w8n81The Swing Voter's Curse in the Laboratory
https://resolver.caltech.edu/CaltechAUTHORS:20170801-090500575
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: 2017
DOI: 10.7907/7b0ph-rw267
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, and clearly reject the notion that voters in the laboratory use naive decision-theoretic strategies. The voters act as if they are aware of the swing voter's curse and adjust their behavior to compensate. While the compensation is not complete and there is some heterogeneity in individual behavior, we find that aggregate outcomes, such as efficiency, turnout, and margin of victory, closely track the theoretical predictions.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/7b0ph-rw267The Compromise Game: Two-sided Adverse Selection in the Laboratory
https://resolver.caltech.edu/CaltechAUTHORS:20170801-094538005
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: 2017
DOI: 10.7907/xv853-bxx57
We analyze a game of two-sided private information characterized by extreme adverse selection, and study a special case in the laboratory. Each player has a privately known "strength" and can decide to fight or compromise. If either chooses to fight, there is a conflict; the stronger player receives a high payoff and the weaker player receives a low payoff. If both choose to compromise, conflict is avoided and each receives an intermediate payoff. The only equilibrium in both the sequential and simultaneous versions of the game is for players to always fight, independent of their own strength. In our experiment, we observe among other things (i) frequent compromise, (ii) little evidence of learning, and (iii) different behavior between first, second and simultaneous movers. We explore several models in an attempt to understand the reasons underlying these anomalous choices, including quantal response equilibrium, cognitive hierarchy, and cursed equilibrium.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/xv853-bxx57Spatial Competition Between Two Candidates of Different Quality: The Effects of Candidate Ideology and Private Information
https://resolver.caltech.edu/CaltechAUTHORS:20170801-141851171
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: 2017
DOI: 10.7907/v19cb-txp80
This paper examines competition in a spatial model of two-candidate elections, where one candidate enjoys a quality advantage over the other candidate. The candidates care about winning and also have policy preferences. There is two-dimensional private information. Candidate ideal points as well as their tradeoffs between policy preferences and winning are private information. The distribution of this two-dimensional type is common knowledge. The location of the median voter's ideal point is uncertain, with a distribution that is commonly known by both candidates. Pure strategy equilibria always exist in this model. We characterize the effects of increased uncertainty about the median voter, the effect of candidate policy preferences, and the effects of changes in the distribution of private information. We prove that the distribution of candidate policies approaches the mixed equilibrium of Aragones and Palfrey (2002a), when both candidates' weights on policy preferences go to zero.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/v19cb-txp80Self-correcting Information Cascades
https://resolver.caltech.edu/CaltechAUTHORS:20170731-133225091
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: 2017
DOI: 10.7907/3dd4s-jz194
In laboratory experiments, information cascades are ephemeral phenomena, collapsing soon after they form, and then reforming again. These formation/collapse/reformation cycles occur frequently and repeatedly. Cascades may be reversed (collapse followed by a cascade on a different state) and more often than not, such a reversal is self-correcting: the cascade switches from the incorrect to the correct state. Past experimental work focused on relatively short horizons, where these interesting dynamics are rarely observed. We present experiments with a longer horizon, and also investigate the effect of signal informativeness. We propose a theoretical model, based on quantal response equilibrium, where temporary and self-correcting cascades arise as equilibrium phenomena. The model also predicts the systematic differences we observe experimentally in the dynamics, as a function of signal informativeness. We extend the basic model to include a parameter measuring base rate neglect and find it to be a statistically significant factor in the dynamics, resulting in somewhat faster rates of social learning.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/3dd4s-jz194Minorities and Storable Votes
https://resolver.caltech.edu/CaltechAUTHORS:20170801-092302519
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: 2017
DOI: 10.7907/ncqpj-fb226
The paper studies a simple voting system that has the potential to increase the power of minorities without sacrificing aggregate efficiency. Storable votes grant each voter a stock of votes to spend as desired over a series of binary decisions. 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 with storable votes, aggregate efficiency either falls little or in fact rises. 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.eduhttps://authors.library.caltech.edu/records/ncqpj-fb226Heterogeneous Quantal Response Equilibrium and Cognitive Hierarchies
https://resolver.caltech.edu/CaltechAUTHORS:20170801-093456313
Authors: {'items': [{'id': 'Camerer-C-F', 'name': {'family': 'Camerer', 'given': 'Colin F.'}, 'orcid': '0000-0003-4049-1871'}, {'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: 2017
DOI: 10.7907/1dxq5-hze86
We explore an equilibrium model of games where players' choice behavior is given by logit response functions, but their payoff responsiveness is heterogeneous. We extend the definition of quantal response equilibrium to this setting, calling it heterogeneous quantal response equilibrium (HQRE), and prove existence under weak conditions. We generalize HQRE to allow for limited insight, in which players can only imagine others with low responsiveness. We identify a formal connection between this new equilibrium concept, called truncated quantal response equilibrium (TQRE), and the Cognitive Hierarchy (CH) model. We show that CH can be approximated arbitrarily closely by TQRE. We report a series of experiments comparing the performance of QRE, HQRE, TQRE and CH. A surprise is that the fi of the models are quite close across a variety of matrix and dominance-solvable asymmetric information betting games. The key link is that in the QRE approaches, strategies with higher expected payoffs are chosen more often than strategies with lower expected payoff. In CH this property is not built into the model, but generally holds true in the experimental data.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/1dxq5-hze86Endogenous Entry and Self-selection in Private Value Auctions: An Experimental Study
https://resolver.caltech.edu/CaltechAUTHORS:20170731-171226910
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Pevniskaya-S', 'name': {'family': 'Pevniskaya', 'given': 'Svetlana'}}]}
Year: 2017
DOI: 10.7907/y1s3v-psz75
This paper presents the results of an experimental study of endogenous entry and bidding behavior in first-price independent private value auctions. In the first stage N potential bidders simultaneously decide whether to participate in an auction or to claim a fixed outside option. At this stage all potential bidders know N, the distribution of possible values, and the value of the outside option. In the second stage, each entering bidder submits a bid after learning their own private value for the object and the number of entering bidders. We find evidence of self-selection effect, as predicted by an equilibrium model of heterogeneous risk averse bidders. The theoretical model predicts that bidding in the auction will be lower with endogenous entry because only the less risk averse bidders will choose to enter. We also find that entry decreases with the value of the outside option, as predicted. One surprising finding is that we observe over-entry relative to the theoretical predictions.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/y1s3v-psz75Efficiency, Equity, and Timing of Voting Mechanisms
https://resolver.caltech.edu/CaltechAUTHORS:20170801-091439642
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: 2017
DOI: 10.7907/2mhxz-jsh85
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 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 pay greater participation costs.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/2mhxz-jsh85An Experimental Study of Storable Votes
https://resolver.caltech.edu/CaltechAUTHORS:20170731-170114634
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: 2017
DOI: 10.7907/m1m03-52j79
The storable votes mechanism is a method of voting 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 multiple decisions. Voters are induced to spend more votes on those decisions that matter to them most, shifting the ex ante probability of winning away from decisions they value less and towards decisions they value more, typically generating welfare gains over standard majority voting with non-storable votes. The 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. In our experiments, realized efficiency levels were remarkably close to theoretical equilibrium predictions, while subjects adopted monotonic but off-equilibrium strategies. We are lead to conclude that concerns about the complexity of the game may have limited practical relevance.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/m1m03-52j79A Voting Model of Federal Standards with Externalities
https://resolver.caltech.edu/CaltechAUTHORS:20170801-134757637
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: 2017
DOI: 10.7907/7cdr5-27t20
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 nonexistence of global majority rule equilibrium, and explore the welfare properties of federal standards in the presence of spillovers.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/7cdr5-27t20A General Characterization of Interim Efficient Mechanisms for Independent Linear Environments
https://resolver.caltech.edu/CaltechAUTHORS:20170731-152920042
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: 2017
DOI: 10.7907/fwfvf-9g770
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 demonstrate how these techniques can be applied easily to the design of auctions, markets, bargaining rules, public good provision, and assignment problems.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/fwfvf-9g770Vote trading with and without party leaders
https://resolver.caltech.edu/CaltechAUTHORS:20170727-100308276
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': 'Turban-Sébastien', 'name': {'family': 'Turban', 'given': 'Sébastien'}}]}
Year: 2017
DOI: 10.7907/4nb9v-8rb51
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 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. All predictions are strongly supported by experimental results.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/4nb9v-8rb51Turnout and Power Sharing
https://resolver.caltech.edu/CaltechAUTHORS:20170727-102658422
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 R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/sh7hr-xth11
Differences in electoral rules and/or legislative, executive or legal institutions across countries induce different mappings from election outcomes to distributions of power. We explore how these different mappings affect voters' participation in a democracy. Assuming heterogeneity in the cost of voting, the effect of such institutional differences on turnout depends on the distribution of voters' preferences for the parties: when the two parties have similar support, turnout is higher in a winner-take-all system than in a power sharing system; the result is reversed when one side has a larger base. The results obtained in the rational voter model are shown to continue to hold in other models of turnout such as ethical voter models and voter mobilization models. Finally, the theoretical comparative results are validated by an experiment, comparing the Levine and Palfrey (2007) results with new data on power sharing elections.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/sh7hr-xth11The Free Rider Problem: a Dynamic Analysis
https://resolver.caltech.edu/CaltechAUTHORS:20170727-105218172
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: 2017
DOI: 10.3386/w17926
We present a dynamic model of free riding in which "n" infinitely lived agents choose between private consumption and contributions to a durable public good "g". We characterize the set of continuous Markov equilibria in economies with reversibility, where investments can be positive or negative; and in economies with irreversibility, where investments are non negative and "g" can only be reduced by depreciation. With reversibility, there is a continuum of equilibrium steady states: the highest equilibrium steady state of "g" is increasing in "n", and the lowest is decreasing. With irreversibility, the set of equilibrium steady states converges to the highest steady state possible with reversibility, as depreciation converges to zero. We also show that in economies with reversibility there are always non-monotonic equilibria in which "g" converges to the steady state with damped oscillations; and there can be equilibria with persistent limit cycles.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/a89vd-tv862The Effect of Candidate Quality on Electoral Equilibrium: An Experimental Study
https://resolver.caltech.edu/CaltechAUTHORS:20170802-160404405
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: 2017
DOI: 10.7907/w2rzf-2gt58
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.eduhttps://authors.library.caltech.edu/records/w2rzf-2gt58The Dynamics of Distributive Politics
https://resolver.caltech.edu/CaltechAUTHORS:20170728-155330544
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: 2017
DOI: 10.7907/qn20c-9s527
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.eduhttps://authors.library.caltech.edu/records/qn20c-9s527No Trade
https://resolver.caltech.edu/CaltechAUTHORS:20170728-151244423
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: 2017
DOI: 10.7907/h4tdm-q9r95
We investigate, in a simple bilateral bargaining environment, the extent to which asymmetric information can induce individuals to engage in exchange where trade is not mutually profitable. We first establish a no-trade theorem for this environment. A laboratory experiment is conducted, where trade is found to occur between 16% and 32% of the time, depending on the specific details of the environment and trading mechanism. In most cases, buyers gain from such exchange, at the expense of sellers. An equilibrium model with naïve, or "cursed," beliefs accounts for some of the behavior findings, but open questions remain.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/h4tdm-q9r95Network Architecture, Salience and Coordination
https://resolver.caltech.edu/CaltechAUTHORS:20170727-165659587
Authors: {'items': [{'id': 'Choi-Syngjoo', '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 R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/m9p9a-hyz82
This paper reports the results of an experimental investigation of monotone games with imperfect information. Players are located at the nodes of a network and observe the actions of other players only if they are connected by the network. These games have many sequential equilibria; nonetheless, the behavior of subjects in the laboratory is predictable. The network architecture makes some strategies salient and this in turn makes the subjects' behavior predictable and facilitates coordination on efficient outcomes. In some cases, modal behavior corresponds to equilibrium strategies.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/m9p9a-hyz82Legislative bargaining and the dynamics of public investment
https://resolver.caltech.edu/CaltechAUTHORS:20170727-112335038
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: 2017
DOI: 10.7907/sffq8-8mn50
We present a legislative bargaining model of the provision of a durable public good over an infinite horizion. In each period, there is a societal endowment which 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 each period, a legislature with 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.eduhttps://authors.library.caltech.edu/records/sffq8-8mn50Information aggregation in standing and ad hoc committees
https://resolver.caltech.edu/CaltechAUTHORS:20170728-145558781
Authors: {'items': [{'id': 'Jacob-S-N-A', 'name': {'family': 'Jacob', 'given': 'S. Nageeb Ali'}}, {'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: 2017
DOI: 10.7907/s6x5b-ztg37
This paper reports results from a laboratory experiment comparing voting behavior and decision making efficiency in standing and ad hoc committees, where decisions are made by unanimity rule. We also compare sequential and simultaneous (secret ballot) voting procedures. The data are remarkably consistent across treatments, in both qualitative (comparative statics) and quantitative terms. The different procedures and the ad hoc or standing nature of the committees generally do not seem to lead to the selection of different equilibria, with the exception of some evidence of bandwagon effects in the sequential procedure.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/s6x5b-ztg37Information Aggregation and Strategic Abstention in Large Laboratory Elections
https://resolver.caltech.edu/CaltechAUTHORS:20170727-151856770
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: 2017
DOI: 10.7907/b2f8f-w2r02
This paper compares strategic abstention in ad hoc committees versus standing committees. Ad hoc committees meet only once and then dissolve, while standing committees. The central finding from this study is that most of the predictions of swing voter curse theory hold up in large elections conducted under controlled laboratory conditions. There is significant abstention, and significant balancing of partisans by uniformed voters; and vote balancing increases with the partisan imbalance. Elections with no partisan imbalance successfully aggregate information and lead to efficient outcomes. Consistent with swing voter curse theory, this efficiency falls off as partisan imbalance increases, but to a significantly greater extent than is predicted in
equilibrium. It is instructive to compare these findings in large elections with results from the elections reported in Battaglini et al. (2007). All of the qualitative results are the same, concerning the comparative statics, balancing, and abstention. One slight difference is that there was less (irrational) voting for α in the small elections than in the large elections, except for the π = 5/9 m = 0 treatment, where we observed 20% voting for α in the small elections,
compared with 10% voting for α in the large elections. These differences were reflected in slightly different efficiency results between small and large elections, with the comparisons mirroring the differences in voting for α: more (irrational) α voting results in lower efficiency. We conclude that this scaled-up study successfully replicates the initial swing voter's curse experiment reported in Battaglini et al. (2007), obtaining very similar findings in laboratory committees that are three times the size of those in the original study. The one caveat is that we found evidence of a slight increase in irrational nonequilibrium behavior (voting for α) in the larger elections. Whether this trend would continue as election size is further scaled up is an open question a swing voter's curse environment.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/b2f8f-w2r02A citizen candidate model with private information and unique equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20170727-163611649
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: 2017
DOI: 10.7907/gdsn6-c9x32
We study a citizen candidate model where citizen ideal points are private information and each ideal point is an independent draw from a uniform distribution. We characterize the equilibrium as a function of the entry cost, the office-holding benefit, and the number of citizens. In contrast to the standard citizen candidate models, equilibrium is unique. Entry is from the extremes of the distribution. A citizen enters if and only if her ideal point greater than or equal to some critical distance from the expected median. Expected policies are more extreme as entry costs increase or office-holding benefits decrease, and as the number of citizens increases.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/gdsn6-c9x32Symmetric play in repeated allocation games
https://resolver.caltech.edu/CaltechAUTHORS:20170727-092437236
Authors: {'items': [{'id': 'Kuzmics-C', 'name': {'family': 'Kuzmics', 'given': 'Christoph'}}, {'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: 2017
DOI: 10.7907/eb78v-njd23
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.eduhttps://authors.library.caltech.edu/records/eb78v-njd23Experiments in Political Economy
https://resolver.caltech.edu/CaltechAUTHORS:20170726-150555535
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/c54mq-f2c90
[No abstract]https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/c54mq-f2c90Equilibrium Tax Rates and Income Redistribution: A Laboratory Study
https://resolver.caltech.edu/CaltechAUTHORS:20170726-144342297
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: 2017
DOI: 10.7907/0xp5n-z9471
This paper reports results from a laboratory experiment that investigates the Meltzer-Richard model of equilibrium tax rates, inequality, and income redistribution. We also extend that model to incorporate social preferences in the form of altruism and inequality aversion. The experiment varies the amount of inequality and the collective choice procedure to determine tax rates. We report four main findings. First, higher wage inequality leads to higher tax rates. The effect is significant and large in magnitude.
Second, the average implemented tax rates are almost exactly equal to the theoretical ideal tax rate of the median wage worker. Third, we do not observe any significant differences in labor supply or average implemented tax rates between a direct democracy institution and a representative democracy system where tax rates are determined by candidate competition. Fourth, we observe negligible deviations from labor supply behavior or voting behavior in the directions implied by altruism or inequality aversion.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/0xp5n-z9471Candidate Entry and Political Polarization: An Anti-Median Voter Theorem
https://resolver.caltech.edu/CaltechAUTHORS:20170725-171230569
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: 2017
DOI: 10.7907/v1seg-1j538
We study a 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 a substantial political polarization, even when the electorate is not polarized and citizens understand that they vote for more extreme candidates. Our results are robust with respect to changes in the implementation of a default policy if no citizen runs for office. We show that polarization increases in the costs of entry and the degree of risk aversion, and decreases in the benefits from holding office. Finally, we provide a simple limiting characterization pf the unique symmetric equilibrium when the number of citizens goes to infinity. In the limit, only the very most extreme citizens, with ideal points at the boundary of the policy space, become candidates.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/v1seg-1j538Mixed Equilibrium in a Downsian Model with a Favored Candidate
https://resolver.caltech.edu/CaltechAUTHORS:20170807-165400595
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: 2017
DOI: 10.7907/d5xt1-9dh42
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 fails 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, 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.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/d5xt1-9dh42Voluntary Implementation
https://resolver.caltech.edu/CaltechAUTHORS:20170808-165154639
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: 2017
DOI: 10.7907/q2nj0-z2j43
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.eduhttps://authors.library.caltech.edu/records/q2nj0-z2j43The Approximation of Efficient Public Good Mechanisms by Simple Voting Schemes
https://resolver.caltech.edu/CaltechAUTHORS:20170808-142250579
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: 2017
DOI: 10.7907/v811f-scj07
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.eduhttps://authors.library.caltech.edu/records/v811f-scj07Regular Quantal Response Equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20170809-091351332
Authors: {'items': [{'id': 'Goeree-J-K', 'name': {'family': 'Goeree', 'given': 'Jacob K.'}, 'orcid': '0000-0001-9876-3425'}, {'id': 'Holt-C-H', 'name': {'family': 'Holt', 'given': 'Charles H.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/jex2e-1q546
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 infinite 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.eduhttps://authors.library.caltech.edu/records/jex2e-1q546Quantal Response Equilibrium and Overbidding in Private-Value Auctions
https://resolver.caltech.edu/CaltechAUTHORS:20170810-132644522
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: 2017
DOI: 10.7907/7m89d-44815
This paper reports the results of a private-values auction experiment in which expected costs of deviating from the Nash equilibrium bidding function are asymmetric, with the implication that upward deviations will be more likely in one treatment than in the other. Overbidding is observed in both treatments, but is more prevalent in the treatment where the costs of overbidding are lower. We specify and estimate a noisy (quantal response) model of equilibrium behavior. Estimated noise and risk aversion parameters are highly significant and consistent across treatments. The resulting two-parameter model tracks both the average bids and the distribution of bids remarkably well. Alternative explanations of overbidding are also considered. The estimates of parameters from a nonlinear probability weighting function yield a formulation that is essentially equivalent to risk aversion in this context. A model in which players experience a "joy of winning" provides a reasonable fit of the data but does significantly worse than the risk aversion model.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/7m89d-44815An Experimental Study of Jury Decision Rules
https://resolver.caltech.edu/CaltechAUTHORS:20170811-153843207
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: 2017
DOI: 10.7907/49qpb-78b68
We present experimental results on individual decisions in juries. We consider the effect of three treatment variables: the size of the jury (three or six), the number of votes needed for conviction (majority or unanimity), and jury deliberation. We find evidence of strategic voting under the unanimity rule, where the form of strategic behavior involves a bias to vote guilty to compensate for the unanimity requirement. A large fraction of jurors vote to convict even when their private information indicates the defendant is more likely to be innocent than guilty. This is roughly consistent with the game theoretic predictions of Feddersen and Pesendorfer (FP) [1998]. While individual behavior is explained well by the game theoretic model, at the level of the jury decision, there are numerous discrepancies. In particular, contrary to the FP prediction, we find that in our experiments juries convict fewer innocent defendants under unanimity rule than under majority rule. We are able to simultaneously account for the individual and group data by using Quantal Response Equilibrium to model the error.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/49qpb-78b68Equilibria in Campaign Spending Games: Theory and Data
https://resolver.caltech.edu/CaltechAUTHORS:20170814-154504840
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: 2017
DOI: 10.7907/v39vq-q2c70
This paper presents a formal game-theoretic model to explain the simultaneity problem that has made 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 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 expected not to be close, using House incumbent races spanning two decades. The theory also implies that inclusion of a variable controlling for total spending should successfully produce reliable estimates using OLS. This is confirmed.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/v39vq-q2c70The Effects of Payoff Magnitude and Heterogeneity on Behavior in 2 x 2 Games with Unique Mixed Strategy Equilibria
https://resolver.caltech.edu/CaltechAUTHORS:20170815-143845609
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'}, {'id': 'Weber-R-A', 'name': {'family': 'Weber', 'given': 'Roberto A.'}}]}
Year: 2017
DOI: 10.7907/95xv9-jkv06
The Logit version of Quantal Response Equilibrium 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 2x2 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 Quantal Response Equilibrium model to allow for heterogeneity, and find that the data fit the heterogeneous version of the theory significantly better.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/95xv9-jkv06Political Confederation
https://resolver.caltech.edu/CaltechAUTHORS:20170815-144929970
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: 2017
DOI: 10.7907/04xcr-91r09
Using a spatial model, we compare different rules for aggregating preferences across confederated districts, under the assumption that voters have private information and face uncertainty about the distribution of preferences of other voters.
Our model includes, as special cases, systems of local representation in national assemblies and parliaments and international legislatures with representatives from member states. We show how induced preferences over the degree of centralization and the method of representation (proportional vs. equal representation of districts) vary systematically across voters and districts, depending on such factors as relative size of the districts, the number of districts, and the variance of underlying policy preferences.
We show that each voter has an ideal confederation in which representation consists solely of equal representation. These ideal confederations vary across voters, but are independent district size. Moderate voters prefer a higher degree of centralization than extreme voters. Preference for centralization is increasing in the number of districts and decreasing in the variance of voter ideal points.
With two districts, majority rule equilibria always exists and can have some degree of proportional representation. With three or more districts, majority rule equilibrium often fails to exist. Nonexistence arises due to cycling in the two dimensional-Centralization x Representation-space of confederations.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/04xcr-91r09Dynamic Efficiency and Voluntary Implementation in Markets with Repeated Pairwise Bargaining
https://resolver.caltech.edu/CaltechAUTHORS:20170810-154039652
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'}]}
Year: 2017
DOI: 10.7907/t1fke-af726
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 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 equlibria of some voluntary negotiation procedure.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/t1fke-af726Interim Efficiency in a Public Goods Problem
https://resolver.caltech.edu/CaltechAUTHORS:20170816-164222869
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: 2017
DOI: 10.7907/y319s-0vv88
We consider a Bayesian public goods environment with independent private valuations, where a public good can be produced at constant returns to scale, up to some capacity. We fully characterize the interim efficient allocation rules and prove that they correspond to decision rules based on a virtual cost-benefit criterion, together with the appropriate incentive taxes. Compared to the classical Lindahl-Samuelson solution there are generally distortions that depend on the welfare weights because the efficient way to reduce the tax burden on low-valuation (resp: high-valuation) types is to reduce (resp: increase) the level of provision of the public good. Second, we explore the implementation of efficient allocations by means of simple, dominant strategy voting rules, called referenda. In a referendum, individuals vote for or against production of the public good. If a sufficiently large fraction vote in favor, the good is provided at maximum capacity and costs are distributed equally across the population. Otherwise the good is not produced. We prove that for each interim efficient allocation rule there exists a referendum that approximates that achieves the same total surplus in large populations. Furthermore, if there is common value uncertainty in addition to the private valuations uncertainty, then the approximately optimal referendum is unique.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/y319s-0vv88A Statistical Theory of Equilibrium in Games
https://resolver.caltech.edu/CaltechAUTHORS:20170816-165243053
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: 2017
DOI: 10.7907/m8276-pad75
This paper describes a statistical model of equilibrium behavior in games, which we call Quanta! Response Equilibrium (QRE). The key feature of the equilibrium is that individuals do not always play best 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 equivalence between this equilibrium notion and Bayesian games derived from games of complete information with perturbed payoffs.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/m8276-pad75Quantal Response Equilibria for Extensive Form Games
https://resolver.caltech.edu/CaltechAUTHORS:20170817-143555993
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: 2017
DOI: 10.7907/prxgj-mg253
This paper 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, Weigelt and Wilson (1993) 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 subgame perfect equilibria in generic extensive form games. We examine data from signalling game experiments by Banks, Camerer, and Porter (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.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/prxgj-mg253Implementation Theory
https://resolver.caltech.edu/CaltechAUTHORS:20170818-161032873
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/f4x3p-w1n11
This surveys the branch of implementation theory initiated by Maskin (1977). Results for both complete and incomplete information environments are covered.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/f4x3p-w1n11Economical Experiments: Bayesian Efficient Experimental Design
https://resolver.caltech.edu/CaltechAUTHORS:20170822-160511103
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: 2017
DOI: 10.7907/gkc2n-v7q38
We propose and implement a Bayesian optimal design procedure. Our procedure takes as its primitives a class of models, a class of experimental designs, and priors on the nuisance parameters of those models. We select the experimental design that maximizes the information (in the sense of Kullback-Liebler) from the experiment. We sequentially sample with the given design and models until all but 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. The first stage of optimal design is illustrated with a simple experimental game with one-sided incomplete information.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/gkc2n-v7q38The Spending Game: Money, Votes, and Incumbency in Congressional Elections
https://resolver.caltech.edu/CaltechAUTHORS:20170824-153709478
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: 2017
DOI: 10.7907/a9wsd-5xx59
This paper takes a game-theoretic approach to the analysis of the spending-votes relationship in Congressional elections to reinvestigate the surprisingly weak effects of incumbent spending measured in previous studies. Rather than focusing narrowly on the impact of spending on electoral outcomes, we attempt to take account of the reciprocal effect of (anticipated) closeness on spending using several statistical approaches. We also offer improvements in the specification and measurement of the vote equation, by using a better measure of district party strength adjusted for year-effects, and by including a variable that measures the heat of the campaign in terms of total spending by the incumbents and challengers. The latter measure partially corrects for the simultaneously determined (and highly positively correlated) levels of incumbent and challenger spending. A more rigorous multiequation simultaneous equations model, identified by uncorrelated errors, provides even more leverage for sorting out the effects of incumbent and challenger spending on votes. That analysis indicates (in a complete turnaround from findings reported elsewhere) that incumbent spending effects are highly significant and of a magnitude that is, if anything, greater than challenger spending effects. The paper concludes by using a game theoretic model to estimate the effect of anticipated closeness on spending and to estimate differences in campaign financing costs between incumbents and challengers.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/a9wsd-5xx59In or Out?: Centralization by Majority Vote
https://resolver.caltech.edu/CaltechAUTHORS:20170822-164842884
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: 2017
DOI: 10.7907/kqm1m-g9v70
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.eduhttps://authors.library.caltech.edu/records/kqm1m-g9v70An Experimental Study of Constant-sum Centipede Games
https://resolver.caltech.edu/CaltechAUTHORS:20170823-133811016
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: 2017
DOI: 10.7907/g1kfx-nex14
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 this data. The first class consists of non-equilibrium modifications of the standard "Always Take" model. The other class we investigate, the Quanta! 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.eduhttps://authors.library.caltech.edu/records/g1kfx-nex14The Holdout Game: An Experimental Study of an Infinitely Repeated Game with Two-Sided Incomplete Information
https://resolver.caltech.edu/CaltechAUTHORS:20170829-134803360
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: 2017
DOI: 10.7907/h5sgq-1q935
We investigate experimentally a two-person infinitely repeated game of incomplete information. In the stage game, each player chooses to give in or hold out. Players have privately known costs of giving in and each player receives a fixed benefit whenever at least one player gives in. High cost players have a dominant strategy in the stage game to hold out, and the low cost players ' best response depends on what the opponent does. Equilibrium play to the infinitely repeated game conveys information about the players' type.
We investigate two questions: whether there is any evidence that subject behavior approximates belief stationary equilibria, and whether there is evidence that subjects will converge to an equilibrium of the correct state. We conclude that subjects do not adopt symmetric belief stationary strategies for the holdout game. However, we cannot reject the hypotheses that subjects converge towards eventually playing an equilibrium of the correct state (even though they do not always learn the correct state). Behavior of experienced subjects is closer to the predictions of symmetric belief-stationary equilibrium.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/h5sgq-1q935Stationarity and Chaos in Infinitely Repeated Games of Incomplete Information
https://resolver.caltech.edu/CaltechAUTHORS:20170829-135834135
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: 2017
DOI: 10.7907/kz8hk-4de75
Consider an incomplete information game in which the players first learn their own types, and then infinitely often play the same normal form game with the same opponents. After each play, the players observe their own payoff and the action of their opponents. The payoff for a strategy n-tuple in the infinitely repeated game is the discounted present value of the infinite stream of payoffs generated by the strategy. This paper studies Bayesian learning in such a setting. Kalai and Lehrer [1991] and Jordan [1991] have shown that Bayesian equilibria to such games exist and eventually look like Nash equilibria to the infinitely repeated full information game with the correct types. However, due to folk theorems for complete information games, this still leaves the class of equilibria for such games to be quite large.
In order to refine the set of equilibria, we impose a restriction on the equilibrium strategies of the players which requires stationarity with respect to the profile of current beliefs: if the same profile of beliefs is reached at two different points in time, the players must choose the same behavioral strategy at both points in time. This set, called the belief stationary equilibria, is a subset of the Bayesian Nash equilibria. We compute a belief stationary equilibrium in an example. The equilibria that result can have elements of chaotic behavior. The equilibrium path of beliefs when types are not revealed can be chaotic, and small changes in initial beliefs can result in large changes in equilibrium actions.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/kz8hk-4de75Repeated Play, Cooperation and Coordination: An Experimental Study
https://resolver.caltech.edu/CaltechAUTHORS:20170830-132920230
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: 2017
DOI: 10.7907/d4sd9-y8j89
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 higher group earnings than result in the one-shot Bayesian Nash equilibrium. The design varied a number of environment al parameters, including the size of the group, the marginal rate of transformation between the public and private good, 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 both on the ability of players to monitor each other's strategy and on the underlying environmental parameters.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/d4sd9-y8j89Engodeneity of Alternating Offers in a Bargaining Game
https://resolver.caltech.edu/CaltechAUTHORS:20170823-134601561
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: 2017
DOI: 10.7907/46qat-kfm09
We investigate an infinite horizon two-person simultaneous offer bargaining game of incomplete information with discounted playoffs. 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, with an agreement benefit accruing to each player, and a cost to the player (or players) that give in. Players have privately known agreement benefits. 'Low benefit players have a weakly dominant strategy to hold out forever; high benefit players would be better off giving in if they knew their opponent was planning to hold out forever.
For any discount factor there is a unique Nash equilibrium in which the two players alternate in their willingness to give in, if the players' priors about each others type are sufficiently asymmetric. Second, for almost all priors, this is the unique equilibrium if the discount factor is close enough to one.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/46qat-kfm09Altruism, Reputation, and Noise in Linear Public Goods Experiments
https://resolver.caltech.edu/CaltechAUTHORS:20170823-154709009
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: 2017
DOI: 10.7907/1rdj0-77t87
We report the results of a public goods experiment using a design that enables us to directly measure individual response functions in voluntary contributions games and estimate error rates. In addition, following Andreoni (1988), we employ two treatments in order to measure the extent to which voluntary contribution is due to reputation effects. The partners treatment involves a fixed group of subjects playing a repeated game. The strangers treatment approximates a one-shot game by randomly changing group assignments after each play. Our data shows that essentially the only difference between the two treatments is the amount of noise in the data, with the strangers treatment being the noisier of the two. This noise manifests itself in two distinct ways. First, there is more variation of decision rules across subjects in the strangers treatment. Second, individual behavior is, on average, less consistent with a cutpoint decision rule in the strangers treatment, which produces higher estimates of individual error rates. The differences between the strangers and partners data are virtually the same as differences between data from experienced and inexperienced subjects. This suggests an explanation for the finding in Andreoni (1988) that there was greater contribution under the strangers treatment in the standard homogeneous environment in which one direction of errors (under-contribution) are censored. Our results also support his conclusion that reputation effects do not appear to play a prominent role in repeated linear public goods voluntary contribution games. Many findings from past public goods experiments are consistent with our model of random variation in a population of subjects who are, on average, neither altruistic nor spiteful.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/1rdj0-77t87Implementation in Bayesian Equilibrium: The Multiple Equilibrium Problem in Mechanism Design
https://resolver.caltech.edu/CaltechAUTHORS:20170831-135222800
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/hvv49-r3f64
This paper surveys the literature on implementation in Bayesian Equilibrium.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/hvv49-r3f64A Bayesian Sequential Experimental Study of Learning in Games
https://resolver.caltech.edu/CaltechAUTHORS:20170831-141309234
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: 2017
DOI: 10.7907/hgs8z-hwd27
We apply a sequential Bayesian sampling procedure to study two models of learning in repeated games. The first model is that individuals learn only about an opponent when they play her/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 non-sequential model. The second model is that 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 that the sequential model.
We sequentially sample observations on the behavior of experimental subjects in the so called 'centipede game'. This game has the property of allowing 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 non-sequential model in favor of the sequential model.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/hgs8z-hwd27Efficient Trading Mechanisms with Pre-Play Communication
https://resolver.caltech.edu/CaltechAUTHORS:20170905-143503727
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: 2017
DOI: 10.7907/69xq2-h8e74
This paper studies the problem of designing efficient trading mechanisms when players may engage in 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. 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.eduhttps://authors.library.caltech.edu/records/69xq2-h8e74A Mathematical Proof of Duverger's Law
https://resolver.caltech.edu/CaltechAUTHORS:20170905-145247491
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/n9fr9-jvy72
A famous stylized fact in comparative politics, Duverger' s Law, is that electoral systems based on single ballot winner-take-all plurality voting will produce bipartisan competition. This paper presents an equilibrium model of elections in which this stylized fact emerges a logical implication of rational strategic voting behavior by individuals in a large heterogeneous electorate.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/n9fr9-jvy72Theories and Tests of Blind Bidding in Sealed-bid Auctions
https://resolver.caltech.edu/CaltechAUTHORS:20170906-154413142
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: 2017
DOI: 10.7907/x766n-4cd70
[No abstract]https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/x766n-4cd70Private Incentives in Social Dilemmas: The Effect of Incomplete Information and Altruism
https://resolver.caltech.edu/CaltechAUTHORS:20170907-151800608
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: 2017
DOI: 10.7907/b0q0b-b0t12
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 al truism model is shown to
be supported by existing experimental data on binary voluntary contribution
games.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/b0q0b-b0t12Mechanism Design with Incomplete Information: A Solution to the Implementation Problem
https://resolver.caltech.edu/CaltechAUTHORS:20170907-152638547
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: 2017
DOI: 10.7907/jh4qb-j1857
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 can be made the unique equilibrium outcome to a mechanism. We derive a general necessary condition for unique implementation which implies that the positive result for private value models applies with considerably less generality to common value settings and to situations in which an agent's information does not index the agent's preferences.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/jh4qb-j1857Nash Implementation Using Undominated Strategies
https://resolver.caltech.edu/CaltechAUTHORS:20170908-151520400
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: 2017
DOI: 10.7907/3fyfp-rks37
This paper provides a characterization of fully implementable outcomes using
undominated Nash equilibrium, i.e. a Nash equilibrium in which no one uses a weakly
dominated strategy. The analysis is conducted in general domains in which agents
have complete information. Our main result is that with at least three agents any
social choice function or correspondence obeying the usual no veto power condition
is implementable unless some players are completely indifferent over all possible
outcomes. This result is contrasted with the more restrictive implementation
findings with either (unrefined) Nash equilibrium or subgame perfect equilibrium.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/3fyfp-rks37On Bayesian Implementable Allocations
https://resolver.caltech.edu/CaltechAUTHORS:20170912-132538243
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: 2017
DOI: 10.7907/0fhs2-c5n57
This paper identifies several social choice correspondences which are and 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.eduhttps://authors.library.caltech.edu/records/0fhs2-c5n57Cartel Enforcement with Uncertainty About Costs
https://resolver.caltech.edu/CaltechAUTHORS:20170912-141652274
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: 2017
DOI: 10.7907/keft3-2tk29
What cartel agreements are possible when firms have private information about production costs? In order for a cartel agreement to work it must take into account the incentives for firms to misrepresent their cost information and it must provide sufficient reward so that no firm wishes to defect. For private cost uncertainty we characterize the set of cartel agreements with side payments that can be supported as Bayesian Nash equilibria. We show that if defection results in either Cournot or Bertrand competition the incentive problems in large cartels are severe enough to prevent the cartel from achieving the monopoly outcome. In contrast, with common cost uncertainty, the incentive problems become less severe in large cartels, allowing perfect collusion.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/keft3-2tk29Agendas, Strategic Voting, and Signaling with Incomplete Information
https://resolver.caltech.edu/CaltechAUTHORS:20170912-143216300
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: 2017
DOI: 10.7907/2h7ha-fxg91
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 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 "2 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 effect final outcomes.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/2h7ha-fxg91Participation and the Provision of Discrete Public Goods: A Strategic Analysis
https://resolver.caltech.edu/CaltechAUTHORS:20170922-164525313
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: 2017
DOI: 10.7907/2vnat-k7q66
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.eduhttps://authors.library.caltech.edu/records/2vnat-k7q66Multiple-Object, Discriminatory Auctions with Bidding Constraints: A Game-Theoretic Analysis
https://resolver.caltech.edu/CaltechAUTHORS:20171013-170452235
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2017
DOI: 10.7907/fwy9p-8mk22
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: buyers submit positive bids only on some restricted subset of the items. Fourth, Nash equilibria typically generate zero "profits" to the buyers. Fifth, when asymmetric solutions exist and the buyers are identical, these solutions are never unique.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/fwy9p-8mk22Social Learning with Private and Common Values
https://resolver.caltech.edu/CaltechAUTHORS:20171102-150824856
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: 2017
DOI: 10.7907/qp2k9-37b69
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.eduhttps://authors.library.caltech.edu/records/qp2k9-37b69Vertigo: Comparing Structural Models of Imperfect Behavior in Experimental Games
https://resolver.caltech.edu/CaltechAUTHORS:20171108-144316123
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: 2017
DOI: 10.7907/084hn-k3v09
This paper investigates learning in games with one-sided incomplete information using laboratory data from a game which we call the game of Vertigo. The predicted Bayes-Nash equilibrium behavior of the agents in this type of game generates overly strong restrictions on the data, including the zero likelihood problem: certain actions should never be observed. To circumvent statistical problems, and to allow for deviations from perfectly rational behavior, we introduce the possibility of players making errors when choosing their actions. We compare two competing models depending on whether players take the errors in actions into consideration when formulating their strategies. We also investigate possible deviations from Bayes's rule, producing too fast or too slow an updating rule. In total, we get six models of sophisticated and unsophisticated strategy formation on the first dimension, and fast, slow, or no updating on the second. We apply a fully Bayesian structural econometric approach to compare the statistical performance of these six models, and to obtain posterior estimates of several nuisance parameters governing the errors in actions. The two models where players are unsophisticated and either use no updating at all, or use dampened updating, have a much higher likelihood than any of the others.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/084hn-k3v09On Eliciting Beliefs in Strategic Games
https://resolver.caltech.edu/CaltechAUTHORS:20171129-145253122
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: 2017
DOI: 10.7907/wc5xm-c6909
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 (Nyarko-Schotter, 2002) 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. There are differences between the elicited beliefs under quadratic and logarithmic scoring rules in spite of both being proper scoring rules. The (improper) linear scoring rule frequently elicits boundary forecasts as theory predicts, and is poorly calibrated. We compare the forecasts of our trained observers to forecasts of the actual players in the Nyarko-Schotter experiment and identify several differences. There was a significant positive correlation between observer forecasts and the choice behavior in the game under both proper scoring rules, but no significant correlation between the players' own forecasts and the actual play. This raises doubts about whether beliefs can be reliably elicited from players who simultaneously have a stake in the target of their forecast, in this case the opponent's choice. The distribution of player forecasts also tended to be more extreme than the observer forecasts using either of the proper scoring rules. We also find evidence of belief convergence when beliefs are elicited iteratively from a group.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/wc5xm-c6909Ratifiable Mechanisms: Learning from Disagreement
https://resolver.caltech.edu/CaltechAUTHORS:20171130-140721592
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: 2017
DOI: 10.7907/7fkp2-7p565
In a mechanism design problem, participation constraints require that all types prefer the proposed mechanism to some status quo alternative. If the payoffs in the status quo depend on strategic actions based on the players' beliefs, then the inferences players make in the event someone objects to the proposed mechanism may alter the participation constraints. We include this possibility for learning from disagreement by modeling the mechanism design problem as a ratification game in which privately informed players simultaneously vote for or against the proposed mechanism. We develop and illustrate a new concept, ratifiability, that takes account of this inferencing problem in a consistent way. Requiring a mechanism to be ratifiable can either strengthen or weaken the standard participation constraints that arise in mechanism design problems.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/7fkp2-7p565External 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/m8x89-14p64An Experimental Study of Vote Trading
https://resolver.caltech.edu/CaltechAUTHORS:20191018-095413777
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}]}
Year: 2019
DOI: 10.7907/zx62f-jxa23
Vote trading is believed to be ubiquitous in committees and legislatures, and yet we know very little of its properties. We return to this old question with a laboratory experiment. We posit that pairs of voters exchange votes whenever doing so is mutually advantageous. This generates trading dynamics that 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. However, there is only weak support for the dynamic trading process itself.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/zx62f-jxa23Trading Votes for Votes. A Dynamic Theory
https://resolver.caltech.edu/CaltechAUTHORS:20191022-145133373
Authors: {'items': [{'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}, {'id': 'Casella-Alessandra', 'name': {'family': 'Casella', 'given': 'Alessandra'}}]}
Year: 2019
DOI: 10.7907/r7xsa-fam18
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 one. 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. If trading is farsighted, a non-empty set of stable vote allocations reachable from a starting vote allocation need not exist, and if it does exist it need not include the Condorcet winner, even in the case of two issues.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/r7xsa-fam18Effects 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.eduhttps://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.eduhttps://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.eduhttps://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.eduhttps://authors.library.caltech.edu/records/hq4xs-gzh17Bilateral Conflict: An Experimental Study of Strategic
Effectiveness and Equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20220125-191230556
Authors: {'items': [{'id': 'Holt-Charles-A', 'name': {'family': 'Holt', 'given': 'Charles A.'}}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2022
DOI: 10.7907/phwgk-0c835
Bilateral conflict involves an attacker with several alternative attack methods and a defender who can take various actions to better respond to different types of attack. These situations have wide applicability to political, legal, and economic disputes, but are particularly challenging to study empirically because the payoffs are unknown. Moreover, each party has an incentive to behave unpredictably, so theoretical predictions are stochastic. This paper reports results of an experiment where the details of the environment are tightly controlled. The results sharply contradict the Nash equilibrium predictions about how the two parties' choice frequencies change in response to the relative effectiveness of alternative attack strategies. In contrast, nonparametric quantal response equilibrium predictions match the observed treatment effects. Estimation of the experimentally controlled payoff parameters across treatments accurately recovers the true values of those parameters with the logit quantal response equilibrium model but not with the Nash equilibrium model.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/phwgk-0c835Cognitive Hierarchies in Extensive Form Games
https://resolver.caltech.edu/CaltechAUTHORS:20220207-233838741
Authors: {'items': [{'id': 'Lin-Po-Hsuan', 'name': {'family': 'Lin', 'given': 'Po-Hsuan'}, 'orcid': '0000-0003-3437-1734'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2022
DOI: 10.7907/fv09c-16q24
The cognitive hierarchy (CH) approach posits that players in a game are heterogeneous with respect to levels of strategic sophistication. A level-k player believes all other players in the game have lower levels of sophistication distributed from 0 to k-1, and these beliefs correspond to the truncated distribution of a "true" distribution of levels. We extend the CH framework to extensive form games, where these initial beliefs over lower levels are updated as the history of play in the game unfolds, providing information to players about other players' levels of sophistication. For a class of centipede games with a linearly increasing pie, we fully characterize the dynamic CH solution and show that it leads to the game terminating earlier than in the static CH solution for the centipede game in reduced normal form.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/fv09c-16q24Games 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.eduhttps://authors.library.caltech.edu/records/ddvkd-77s15Cursed Sequential Equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20230127-215732171
Authors: {'items': [{'id': 'Fong-Meng-Jhang', 'name': {'family': 'Fong', 'given': 'Meng-Jhang'}}, {'id': 'Lin-Po-Hsuan', 'name': {'family': 'Lin', 'given': 'Po-Hsuan'}, 'orcid': '0000-0003-3437-1734'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2023
DOI: 10.7907/qnknz-6g493
This paper develops a framework to extend the strategic form analysis of cursed equilibrium (CE) developed by Eyster and Rabin (2005) to multi-stage games. The approach uses behavioral strategies rather than normal form mixed strategies, and imposes sequential rationality. We define cursed sequential equilibrium (CSE) and compare it to sequential equilibrium and standard normal-form CE. We provide a general characterization of CSE and establish its properties. We apply CSE to five applications in economics and political science. These applications illustrate a wide range of differences between CSE and Bayesian Nash equilibrium or CE: in signaling games; games with preplay communication; reputation building; sequential voting; and the dirty faces game where higher order beliefs play a key role. A common theme in several of these applications is showing how and why CSE implies systematically different behavior than Bayesian Nash equilibrium in dynamic games of incomplete information with private values, while CE coincides with Bayesian Nash equilibrium for such games.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/qnknz-6g493A Note on Cursed Sequential Equilibrium and Sequential Cursed Equilibrium
https://resolver.caltech.edu/CaltechAUTHORS:20230412-232506011
Authors: {'items': [{'id': 'Fong-Meng-Jhang', 'name': {'family': 'Fong', 'given': 'Meng-Jhang'}}, {'id': 'Lin-Po-Hsuan', 'name': {'family': 'Lin', 'given': 'Po-Hsuan'}, 'orcid': '0000-0003-3437-1734'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2023
DOI: 10.7907/k9a6d-7gv65
In this short note, we compare the cursed sequential equilibrium (CSE) by Fong et al. (2023) and the sequential cursed equilibrium (SCE) by Cohen and Li (2023). We identify eight main differences between CSE and SCE with respect to the following features:
(1) the family of applicable games,
(2) the number of free parameters,
(3) the belief updating process,
(4) the treatment of public histories,
(5) effects in games of complete information,
(6) violations of subgame perfection and sequential rationality,
(7) re-labeling of actions, and
(8) effects in one-stage simultaneous-move games.https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/k9a6d-7gv65Organizing for Collective Action: Olson Revisited
https://authors.library.caltech.edu/records/k04xn-z8w46
Authors: {'items': [{'id': 'Battaglini-Marco', 'name': {'family': 'Battaglini', 'given': 'Marco'}, 'orcid': '0000-0001-9690-0721'}, {'id': 'Palfrey-T-R', 'name': {'family': 'Palfrey', 'given': 'Thomas R.'}, 'orcid': '0000-0003-0769-8109'}]}
Year: 2023
DOI: 10.7907/k04xn-z8w46
<p>We study a standard collective action problem in which successful achievement of a group interest requires costly participation by some fraction of its members. How should we model the internal organization of these groups when there is asymmetric information about the preferences of their members? How effective should we expect it to be as we increase the group's size n? We model it as an optimal honest and obedient communication mechanism and we show that for large n it can be implemented with a very simple mechanism that we call the Voluntary Based Organization. Two new results emerge from this analysis. Independently of the assumptions on the underlying technology, the limit probability of success in the best honest and obedient mechanism is the same as in an unorganized group, a result that is not generally true if obedience is omitted. An optimal organization, however, provides a key advantage: when the probability of success converges to zero, it does so at a much slower rate than in an unorganized group. Because of this, significant probabilities of success are achievable with simple honest and obedient organizations even in very large groups.</p>https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/k04xn-z8w46