Showing papers by "Steffen Huck published in 2006"

Competition Fosters Trust

Abstract: We study the effects of reputation and competition in a stylized market for experience goods. If interaction is anonymous, such markets perform poorly: sellers are not trustworthy, and buyers do not trust sellers. If sellers are identifiable and can, hence, build a reputation, efficiency quadruples but is still at only a third of the first best. Adding more information by granting buyers access to all sellers' complete history has, somewhat surprisingly, no effect. On the other hand, we find that competition, coupled with some minimal information, eliminates the trust problem almost completely.

Endogenous leadership in teams

Abstract: In this paper we study the mechanics of “leading by example” in teams. Leadership is beneficial for the entire team when agents are conformists, i.e., dislike effort differentials. We also show how leadership can arise endogenously and discuss what type of leader benefits a team most.

Competition Fosters Trust

Abstract: We study the effects of reputation and competition in a stylized market for experience goods. If interaction is anonymous, such markets perform poorly: sellers are not trustworthy, and buyers do not trust sellers. If sellers are identifiable and can, hence, build a reputation, efficiency quadruples but is still at only a third of the first best. Adding more information by granting buyers access to all sellers’ complete history has, somewhat surprisingly, no effect. On the other hand, we find that competition, coupled with some minimal information, eliminates the trust problem almost completely.

Information Processing, Learning and Analogy-based Expectation: an Experiment

Abstract: Mental content comes to mind more or less easily depending on its ‘accessibility’(Higgins 1996). We consider how learning is a¤ected by the framing of feedback information about opponents’ play when subjects are engaged in several interactions. Speci…cally, we examine an experimental setting where the feedback’s content is identical across treatments, but the presentation di¤ers, inducing di¤erent degrees of accessibility. Behavior di¤ers strongly between treatments and we show that the observed di¤erences can be organized by applying the concept of analogy-based expectation equilibrium (Jehiel 2005). Additional treatments were designed to examine behavior when feedback mirrors the theoretically assumed mental representations, and behavior in these treatments con…rms the analogy-based expectations hypothesis. More generally, our results suggest the need to incorporate framing considerations into equilibrium analysis.

Spatial voting with endogenous timing

Abstract: We consider a model of (spatial) voting with endogenous timing. In line with what is observed in actual political campaigns, candidates can decide endogenously when and where to locate. More specifically, we analyze endogenous timing in a two-period n-candidate spatial-voting game on the unit interval. We show that this game possesses a pure strategy equilibrium. The equilibrium concept is a simplified version of subgame perfection defined by Osborne (1993) for use in games that possess noor only very complex subgame perfect equilibria. We demonstrate the latter point by also analyzing the subgame perfect equilibria in three-candidate spatial voting with endogenous timing. Our results show that accounting for endogenous timing can eliminate some of the more unappealing equilibrium characteristics of the standard model.

The Miracle as a Randomization Device: A Lesson from Richard Wagner's Romantic Opera Tannhäuser Und De Sängerkrieg Auf Wartburg

Abstract: In this paper we provide textual evidence on the sophistication of medieval deterrence strategies. Drawing on one of the great opera librettos based on medieval sources, Wagner's Tannhauser, we shall illustrate the use of optimal randomization strategies that can be derived by applying notions of dominance or trembling-hand perfection. Particular attention is paid to the employed randomization device.

Information Processing and Learning: Testing the Analogy-based Expectation Approach

Abstract: Mental contents come to mind more or less easily depending on their ’accessibility’(Higgins, 1996). We consider how the pattern of learning is a¤ected by the framing of feedback about opponents’ play when subjects are engaged in several interactions. Speci…cally, we examine a setting where the feedback about opponents’play made available to subjects along the learning process is identical across two treatments, but the presentation di¤ers to make it accessible game by game in one treatment but not in the other. Behavior di¤ers strongly between the two treatments and we show that the di¤erence in behaviors can be explained by using the concept of analogy-based expectation equilibrium (Jehiel 2005). Two further experimental treatments were designed to examine behavior when information is restricted to match the theoretical mental representations, and behavior in these treatments strongly con…rms the hypothesis. More generally, the experiment suggests the need to incorporate framing considerations into equilibrium analysis.