2013-08-31 papers

on Neuroeconomics

Issue of 2013‒08‒31
two papers chosen by

Language, Meaning, and Games: Comment By Heller, Yuval
It is Not Just Confusion! Strategic Uncertainty in an Experimental Asset Market By Eizo Akiyama; Nobuyuki Hanaki; Ryuichiro Ishikawa

By:	Heller, Yuval
Abstract:	Demichelis and Weibull (2008 AER) show that adding lexicographic lying costs to coordination games with cheap talk yields a sharp prediction: only the efficient outcome is evolutionarily stable. I demonstrate that this result is caused by the discontinuity of preferences, rather than by small lying costs per se.
Keywords:	Lexicographic preferences, evolutionary stability, cheap talk.
JEL:	C73
Date:	2013–08–29
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:49375&r=neu

It is Not Just Confusion! Strategic Uncertainty in an Experimental Asset Market

By:	Eizo Akiyama (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba); Nobuyuki Hanaki (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales [EHESS] - Ecole Centrale Marseille (ECM), IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique); Ryuichiro Ishikawa (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)
Abstract:	To what extent is the observed mis-pricing in experimental asset markets caused by strategic uncertainty (SU) and by individual bounded rationality (IBR)? We address this question by comparing subjects initial price forecasts in two market environments - one with six human traders, and the other with one human and five computer traders. We find that both SU and IBR account equally for the median initial forecasts deviation from the fundamental values. The effect of SU is greater for subjects with a perfect score in the Cognitive Reflection Test, and it is not significant for those with low scores.
Keywords:	bounded rationality; strategic uncertainty; experiment; asset markets; computer traders; cognitive reflection test
Date:	2013–08
URL:	http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00854513&r=neu

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