Saliency of outside options in the lost wallet game

James C. Cox, M. Servátka, Radovan Vadovič

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

This paper reports an experiment designed to shed light on an empirical puzzle observed by Dufwenberg and Gneezy (Games and Economic Behavior 30:163-182, 2000) that the size of the foregone outside option by the first mover does not affect the behavior of the second mover in a lost wallet game. Our conjecture was that the original protocol may not have made the size of the forgone outside option salient to second movers. Therefore, we change two features of the Dufwenberg and Gneezy protocol: (i) instead of the strategy method we implement a direct response method (sequential play) for the decision of the second mover; and (ii) we use paper money certificates that are passed between the subjects rather than having subjects write down numbers representing their decisions. We observe that our procedure yields qualitatively the same result as the Dufwenberg and Gneezy experiment, i. e., the second movers do not respond to the change in the outside option of the first movers.

Original languageEnglish
Pages (from-to)66-74
Number of pages9
JournalExperimental Economics
Volume13
Issue number1
DOIs
Publication statusPublished - Feb 2010
Externally publishedYes

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