18 Jan: Natalie Lee (QSMS Seminar)

Natalie Lee

Presenting Feigning Ignorance for Long-term Gains: Theory and Experiment at 12:15-13:30 in QA406.

On 18th January 2019 we have Natalie Lee of New York University visiting us. She is going to give a seminar titled Feigning Ignorance for Long-term Gains: Theory and Experiment at 12:15-13:30 in room A406  in Building Q, Budapest University of Technology and Economics, Faculty of Economic and Social Sciences, Magyar tudósok körútja 2, 1117 Budapest.

Abstract: In many strategic situations, such as military conflicts, market competition, and insider trading, a player might be able to spy on another player’s action before taking his own. This possibility of spying introduces uncertainty over the order of the moves in games. I study the particular strategic tension in dynamic games where an informed player might “play dumb” in order to manipulate his opponent’s suspicion and gain higher payoffs in the future. I model this situation as a two-period 2×2 game and find the conditions under which the informed player plays dumb in the perfect Bayesian equilibrium. I design and conduct two experiments. The first experiment directly tests the predictions of the two-period 2×2 game and finds that informed players rarely play dumb, counter to the prediction of the theory. In a second experiment with a two-period hide-and-seek game with 100 actions, I find that a substantial fraction of subjects play dumb.