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Unpublished Paper
Individual Decision Making in Exogenous Targeting Instrument Experiments
Economics Department Working Paper Series (2002)
  • John M. Spraggon, University of Massachusetts - Amherst
Abstract
The experimental treatments analysed in this paper are simple in that there is a unique Nash equilibrium resulting in each player having a dominant strategy. However, the data show quite clearly that subjects do not always choose this strategy. In fact, when this dominant strategy is not a “focal” outcome it does not even describe the average decision adequately. It is shown that average individual decisions are best described by a decision error model based on a censored distribution as opposed to the truncate regression model which is typically used in similar studies. Moreover it is shown that in the treatments where the dominant strategy is not “focal” dynamics are important with average subject decisions initially corresponding to the “focal” outcome and then adjusting towards the Nash prediction. Overall, 66.7% of subjects are consistent with Payoff Maximization, 27.8% are consistent with an alternate preference maximization and 5.6% are random.
Keywords
  • Quantal Response,
  • Moral Hazard In Groups,
  • Exogenous Targeting Instruments,
  • Experiments
Disciplines
Publication Date
January, 2002
Citation Information
John M. Spraggon. "Individual Decision Making in Exogenous Targeting Instrument Experiments" Economics Department Working Paper Series (2002)
Available at: http://works.bepress.com/john_spraggon/3/