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Games played through agents in the laboratory — a test of Prat & Rustichini's model

Ensthaler, L; Huck, S; Leutgeb, J; (2020) Games played through agents in the laboratory — a test of Prat & Rustichini's model. Games and Economic Behavior , 119 pp. 30-55. 10.1016/j.geb.2019.09.013. Green open access

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Abstract

From the regulation of sports to lawmaking in parliament, in many situations one group of people (“agents”) make decisions that affect the payoffs of others (“principals”) who may offer action-contingent transfers in order to sway the agents' decisions. Prat and Rustichini (2003) characterize pure-strategy equilibria of such Games Played Through Agents. Specifically, they predict the equilibrium outcome in pure strategies to be efficient. We test the theory in a series of experimental treatments with human principals and computerized agents. The theory predicts remarkably well which actions and outcomes are implemented but subjects' transfer offers deviate systematically from equilibrium. We show how quantal response equilibrium accounts for the deviations and test its predictions out of sample. Our results show that quantal response equilibrium is particularly well suited for explaining behavior in such games.

Type: Article
Title: Games played through agents in the laboratory — a test of Prat & Rustichini's model
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.geb.2019.09.013
Publisher version: https://doi.org/10.1016/j.geb.2019.09.013
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Games played through agents, Experiment, Quantal response equilibrium
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10086885
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