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We propose a five-player common-pool resource (CPR) game with endogenous coalition formation. We show that the level of extraction from the CPR depends on the size of each coalition that is formed and on the final coalition structure. These predictions are tested in a laboratory experiment. We consider two treatments: dictator vs. veto. In the dictator treatment, at each stage of the coalition formation game, a randomly chosen player imposes the coalition size and selected members cannot refuse to become a member. In the veto treatment, players have the right to refuse joining the current coalition if they want to and make counter-proposals. We observe that the formation of the grand coalition is more frequent in the dictator treatment. However, with the repetition of the coalition formation game, the grand coalition becomes more frequent under both treatment, and past experience of a grand coalition increases the likelihood that the current coalition structure is the grand coalition. Finally, the possibility to form coalitions is beneficial at reducing CPR extractions, compared to the singleton structure, in both treatments.

Conventional finance models assume that stock price magnitude should not influence portfolio choices or future returns. This view is contradicted, however, by empirical evidence. In this paper, we show that trading prices, in experimental markets, are processed differently by participants depending on their magnitude. Our experiment has two consecutive treatments. One where the fundamental value is a small number (small price market) and one where the fundamental value is a large number (large price market). Small price markets exhibit greater mispricing than large price markets. We obtain this result both between-participants and within-participants. Our findings indicate that price magnitude has a direct impact on how individuals perceive the distribution of future returns. This result is at odds with standard finance theory but is consistent with: (1) evidence in neuropsychology on the use of different mental scales for small and large numbers, and (2) empirical results in the finance and accounting literature.

International audience; We study experimentally a two-stage common pool resource game. In the first stage, selected members of the group determine the level of protection for the resource. The protected fraction of the resource is equally shared among group members. In the second stage, the unprotected fraction of the resource is competed for. We consider three institutions varying in the extent by which subjects participate in the first stage: vote(all group members participate), dictator (only one member decides), and exogenous (no-one participates). We also vary the initial level of the resource: scarce or abundant. We establish the following results. First, we find that the voting institution provides more frequent protection and leads to higher protection levels than the dictatorial institution. In addition, higher protection tends to temper rent seeking for the unprotectedfraction of the resource for both institutions. Second, rent-seeking intensifies after a resource boom, but this effect is non-significant under the vote institution. Finally, rent-seeking is larger when the level of the resource is high, but this tendency is sharply reduced under the vote institution

We here introduce a beauty contest game with negative feedback and interior equilibrium in a multi-period experiment. This game is isomorphic to classical BCG but fit economic situations such as crop production or professional investment better. The game is still being analysed from the eductive point of view and with respect to the attempt to establish a typology of players according to their depths of reasoning. Our main contribution to the understanding of this game is the formalization of the process by which the information is processed. Using the Shannon entropy criterion, we evaluated information and made a link between the Sperber analysis of reflective and intuitive beliefs and numerical psychological research (Dehaene, 1993). Information that players take into account in their choices is denoted useful information. As this depends on the exploitation of the strategy interval, it will be higher in BCG- than in BCG+ in the first iterations, because strategies are numbers that are naturally scanned several times. As argued by Sperber (1997), there is a point in the reasoning process starting from which reflective beliefs become intuitive. In order to determine the exact location of the specific point from which players in the BCG- can jump to the REE, we assume that sophisticated reasoning is costly. Therefore, an agent stops calculating at step k which is obtained by the intersection between his marginal cost function and his marginal benefit (information) function. However, there are individuals who are not able to reach that point, because their cognitive constraint is saturated beforehand. There are also individuals for whom the cognitive constraint is saturated for a value higher that k, but who stop at step k because, given the structure of the population, they can win the game at a smaller cost. Therefore, a guess in this game corresponds to the solution of the system comprising these two constraints. For our experiments, we found a depth of reasoning smaller than 3, which can, however, be optimal. Results show that the k-step thinking with k

In this paper we try to neutralize the strategic behaviour commonly observed in experimental cobweb markets (Sutan and Willinger, 2002, 2003) in order to restore the coherence of the production decisions and price forecasts. This is done by introducing into the experimental design a circularity operator by which each subject has to make a guess about the price determined by the production decisions of all other agents in the market (except himself). With this procedure we eliminate market power, by generating a situation of local asymmetrical interaction : each agent i acts as a price-taker on his own market while the n-1 remaining players are price-makers. However, from a global point of view, all the subjects are inter-connected, and therefore are perfectly symmetric. Each subject assumes fundamentally two roles : he acts as a price-taker on his own product market since his production decision does not affect his own price, but he acts as a price-maker on the other players' markets, since his production decision affects other players' selling price. Such circular links between agents can be vicious, because if a single agent adopts a risky behaviour, he drives all markets in which he is involved in the same direction. However, we make the assumption that circularity could eliminate the non-coherent behaviours and transform the producers into real price-takers (it becomes virtuous). This assumption is tested experimentally. We show that: i) prices are stationary around the rational expectations equilibrium; ii) subjects do not exhibit strategic behaviour even in the first part of the experiment; iii) the subjects' forecasts come very close to the equilibrium; iv) price series on various markets are correlated; v) over time, the participants take into account the prices and their individual production when they form their forecasts, which testifies of their ability of sophistication and comprehension of the interactions of the economy.