Clocks and Trees: Isomorphic Dutch Auctions and Centipede Games
Econometrica · 2012 · Volume 80 · Issue 2
Abstract
We report an experiment on effects of varying institutional format and dynamic structure of centipede games and Dutch auctions. Centipede games with a clock format unravel, as predicted by theory but not reported in previous literature on two-player tree-format centipede games. Dutch auctions with a tree format produce bids close to risk neutral Nash equilibrium bids, unlike previous literature on clock-format Dutch auctions. Our data provide a new, expanded set of stylized facts which may provide a foundation for unified modeling of play in a class of games that includes centipede games and Dutch auctions.
Keywords
Experiment, game theory, centipede games, Dutch auctions, institutional format, dynamic structure
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