boundedly rational versus optimization based models of strategic thinking and learning in games harstad and selten s article in this forum performs a valuable service by highlighting the dominance of optimization based models over boundedly rational models in modern microeconomics and questioning whether optimization based models are a better way forward than boundedly rational models this article complements rabin s response to harstad and selten focusing on modeling strategic behavior i consider harstad and selten s examples and proposed boundedly rational models in the light of modern behavioral economics and behavioral game theory commenting on the challenges that remain and the most promising ways forward

games with unique mixed strategy equilibria an experimental study abstract the results of an experiment studying the choices of subjects playing mixed extensions of three variants of simple 2 2 non constant sum strictly competitive games of the same form matching pennies are presented subjects exhibited a variety of behavioral adaptive learning strategies this heterogeneity of individual behavior produced aggregate dynamics whose estimated steady states are quite different from those predicted by the nash equilibria of those stage games with asymmetrical payoff functions the observed aggregative dynamics are well accounted for both by a quantal equilibrium model of mckelvey and palfrey and by a learning model of roth and erev journal of economic literature classification number c72

the use and abuse of meta analysis in environmental and natural resource economics an assessment motivated by the 2006 report of a work group appointed by the environmental protection agency epa this paper examines the present state of meta analysis in environmental economics and offers recommendations for its future use to this end we summarize and assess 140 meta analyses from 125 published and unpublished studies covering 17 topical categories in environmental and resource economics first we provide several generic meta analysis models as reference points and discuss major estimation issues five econometric issues are identified as part of a complete analysis 1 sample selection criteria 2 basic data summary 3 primary data heterogeneity 4 heteroskedasticity and 5 non independence of multiple observations from primary studies second a tabular summary is presented for the 140 meta analyses with respect to estimation methods third a narrative summary is presented for 19 meta analyses including the three value of statistical life studies examined by the epa work group and one analysis from each of 16 other categories fourth we offer a set of best practice guidelines for future meta analyses in this and other areas of economics last the paper comments on the use of meta analytic methods for benefit transfers of environmental values

impulse balance in the newsvendor game abstract one striking behavioral phenomenon is the pull to center bias in the newsvendor game facing stochastic demand subjects tend to order quantities between the expected profit maximizing quantity and mean demand we show that the impulse balance equilibrium which is based on a simple ex post rationality principle along with an equilibrium condition predicts the pull to center bias and other more subtle observations in the laboratory newsvendor game

strategies and evolution in the minority game a multi round strategy experiment abstract minority games are a stylized description of strategic situations with both coordination and competition these games are widely studied using either simulations or laboratory experiments simulations can show the dynamics of aggregate behavior but the results of such simulations depend on the type of strategies used so far experiments provided little guidance on the type of strategies people use because the set of possible strategies is very large we therefore use a multi round strategy method experiment to directly elicit people s strategies between rounds participants can adjust their strategy and test the performance of possible new strategies against strategies from the previous round strategies gathered in the experiment are subjected to an evolutionary competition the strategies people use are very heterogeneous although aggregate outcomes resemble the symmetric nash equilibrium the strategies that survive evolutionary competition achieve much higher levels of coordination

high and declining prices signal product quality high and declining prices signal a high quality product high prices are the efficient means of signaling because the consequent loss of sales volume is most damaging for lower cost lower quality products as time passes and the number of informed consumers increases the signaling distortion lessens resulting in a declining price profile the prediction of high and declining prices is robust across a variety of dynamic models and is consistent with recent empirical findings copyright 1991 by american economic association

picture this a simple graph that reveals much ado about research funnel graphs provide a simple yet highly effective means to identify key features of an empirical literature this paper illustrates the use of funnel graphs to detect publication selection bias identify the existence of genuine empirical effects and discover potential moderator variables that can help to explain the wide variation routinely found among reported research findings applications include union productivity effects water price elasticities common currency trade effects minimum wage employment effects efficiency wages and the price elasticity of prescription drugs

stationary concepts for experimental 2 x 2 games comment reinhard selten and thorsten chmura 2008 recently reported laboratory results for completely mixed 2 x 2 games used to compare nash equilibrium with four other stationary concepts quantal response equilibrium action sampling equilibrium payoff sampling equilibrium and impulse balance equilibrium we reanalyze their data correct some errors and find that nash clearly fits worst while the four other concepts perform about equally well we also report new analysis of other previous experiments that illustrate the importance of the loss aversion hardwired into impulse balance equilibrium when the other non nash concepts are augmented with loss aversion they outperform impulse balance equilibrium

meta analysis of economics research reporting guidelines meta regression analysis mra can provide objective and comprehensive summaries of economics research their use has grown rapidly over the last few decades to improve transparency and to raise the quality of mra the meta analysis of economics research network maer net has created the below reporting guidelines future meta analyses in economics will be expected to follow these guidelines or give valid reasons why a meta analysis must deviate from them

bounded rationality models tasks to become intellectually competitive abstract research in experimental economics has cogently challenged the fundamental precept of neoclassical economics that economic agents optimize the last two decades have seen elaboration of boundedly rational models that try to move away from the optimization approach in ways consistent with experimental findings nonetheless the collection of alternative models has made little headway supplanting the dominant paradigm we delineate key ways in which neoclassical microeconomics holds continuing and compelling advantages over bounded rationality models and suggest via a few examples the sorts of further difficult pushes that would be needed to redress this state of affairs closer collaboration between theoretic modeling and experiments is clearly seen to be necessary jel b40 c72 c90 d01 d21

stationary concepts for experimental 2x2 games a reply this is a reply to stationary concepts for experimental 2 x 2 games comment by brunner camerer and goeree which corrects some computational errors in selten and chmura 2008 and extends the comparison of five stationary concepts to data from previous experimental studies we critically discuss their new findings and relate them to the data of selten and chmura 2008 we conclude that the parametric concepts of action sampling equilibrium and payoff sampling equilibrium perform better than quantal response equilibrium and that the non parametric concept of impulse balance equilibrium performs at least as well as quantal response equilibrium

worker participation and productivity in labor managed and participatory capitalist firms a meta analysis using meta analytic techniques the author synthesizes the results of 43 published studies to investigate the effects on productivity of various forms of worker participation worker participation in decision making mandated codetermination profit sharing worker ownership employee stock ownership or individual worker ownership of the firm s assets and collective ownership of assets workers collective ownership of reserves over which they have no individual claim he finds that codetermination laws are negatively associated with productivity but profit sharing worker ownership and worker participation in decision making are all positively associated with productivity all the observed correlations are stronger among labor managed firms firms owned and controlled by workers than among participatory capitalist firms firms adopting one or more participation schemes involving employees such as esops or quality circles

hedonic prices for fish tuna prices in hawaii over the past two decades the marketing of fish has recognized the importance of quality yet empirical analysis of market transactions could give us little insight into the value of different qualities of fish because market data are typically aggregated we exploit a dataset on the auction price of tuna sold in hawaii to estimate a hedonic model the model provides empirical estimates of price increments due to species quality of the fish such as size or fat content method of handling and market conditions the empirical results are also used to estimate price flexibilities for landings in hawaii

are all economic facts greatly exaggerated theory competition and selectivity there is growing concern and mounting evidence of selectivity in empirical economics most empirical economic literatures have a truncated distribution of results the aim of this paper is to explore the link between publication selectivity and theory contests this link is confirmed through the analysis of 87 distinct empirical economics literatures involving more than three and a half thousand separate empirical studies using objective measures of both selectivity and contests our meta meta analysis shows that publication selection is widespread but not universal it distorts scientific inference with potentially adverse effects on policy making but competition and debate between rival theories reduces this selectivity and thereby improves economic inference

the pricing of experience goods the example of en primeur wine the market for primeur wine in the bordeaux region allows producers to sell wine that is still in barrels as with all experience goods producers send quality signals to uninformed buyers using original data on bordeaux wines we show that the pricing behavior of producers depends to a large extent on their reputation and much less on short term changes in quality as measured by experts grades we also find that the primeur price has an informative role since a 10 increase in primeur price leads to a 3 increase in prices on the market for bottled wine

risk averse behavior in generalized matching pennies games 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

the effects of payoff magnitude and heterogeneity on behavior in 2 2 games with unique mixed strategy equilibria 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

predicting the quality and prices of bordeaux wine bordeaux wines have been made in much the same way for centuries this article shows that the variability in the quality and prices of bordeaux vintages is predicted by the weather that created the grapes the price equation provides a measure of the real rate of return to holding wines about 2 3 per annum and implies far greater variability in the early or en primeur wine prices than is observed the analysis provides a useful basis for assessing market inefficiency the effect of climate change on the wine industry and the role of expert opinion in determining wine prices

wine prices and quality ratings a meta regression analysis this article examines the empirical support for the hypothesized hedonic theoretical relation between the price of wine and its quality the examination considers over 180 hedonic wine price models developed over 20 years covering many countries the research identifies that the relation between the price of wine and its sensory quality rating is a moderate partial correlation of 0 30 this correlation exists despite the lack of information held by consumers about a wine s quality and the inconsistency of expert tasters when evaluating wines the results identify a moderate price quality correlation which suggests the existence of strategic buying opportunities for better informed consumers strategic price setting possibilities may also exist for wine producers given the incomplete quality information held by consumers the results from the meta regression analysis point to the absence of any publication bias and attribute the observed asymmetry in estimates to study heterogeneity the analysis suggests the observed heterogeneity is explained by the importance of a wine s reputation the use of the 100 point quality rating scale the analysis of a single wine variety style and the employed functional form the most important implication from the analysis is the relative importance of a wine s reputation over its sensory quality inferring that producers need to sustain the sensory quality of a wine over time to extract appropriate returns the reputation of the wine producer is found not to influence the strength of the price quality relationship this finding does not contradict the importance of wine producer reputation in directly influencing prices

impulse balance equilibrium and feedback in first price auctions abstract experimental sealed bid first price auctions with private values in which feedback on the losing bids is provided yield lower revenues than auctions where this feedback is not given the concept of weighted impulse balance equilibrium which is based on a principle of ex post rationality and incorporates a concern for social comparison captures the data

towards a differentiated modelling of origin effects in hedonic analysis an application to auction prices of specialty coffee abstract origin matters this has been shown by numerous studies using either discrete choice or hedonic approaches to derive implicit prices for origin as a product attribute in most of the hedonic studies intercept dummies were introduced for specific regional origins and statistically significant coefficients of those variables were seen as an indication of either a superior or inferior reputation compared to products from other origins we argue that hedonic pricing models of this type may be too simple to detect the true origin effects if assessments of a product s sensory quality are available and interact with prior beliefs about reputation based on a supply and demand framework to explain auction prices a reduced form hedonic pricing model is suggested that includes intercept as well as slope dummy effects of the regional origin because reputation and the objective product quality are particularly important for markets of differentiated high quality foods and beverages we analyze electronic auction markets for specialty coffees the findings for the cup of excellence data reveal that it is important to distinguish reputation sensory quality and their interaction as determinants of coffee auction prices as well as varying origin impacts across market segments

estimation of a hedonic price equation for bordeaux wine does quality matter in this paper the hedonic price technique is applied to bordeaux wine in the hedonic price function we include not only the objective characteristics appearing on the label of the bottle but also the sensory characteristics of the wine our data come from an experimental study in which juries have evaluated and graded a sample of bordeaux wines the estimation of the hedonic price equation shows that the market price is essentially determined by the objective characteristics the estimation of a jury grade equation shows that quality unlike the market price is essentially determined by the sensory characteristics

stationary concepts for experimental 2x2 games five stationary concepts for completely mixed 2 x 2 games are experimentally compared nash equilibrium quantal response equilibrium action sampling equilibrium payoff sampling equilibrium martin j osborne and ariel rubinstein 1998 and impulse balance equilibrium experiments on 12 games 6 constant sum games and 6 nonconstant sum games were run with 12 independent subject groups for each constant sum game and 6 independent subject groups for each nonconstant sum game each independent subject group consisted of four players 1 and four players 2 interacting anonymously over 200 periods with random matching the comparison of the five theories shows that the order of performance from best to worst is as follows impulse balance equilibrium payoff sampling equilibrium action sampling equilibrium quantal response equilibrium nash equilibrium