Events
BENC symposium, Monday, 13th April, 2015
The symposium features two speakers: Daniel Houser (George Mason University), Gordon Brown (University of Warwick).
Speaker: Professor Daniel Houser, George Mason University
Topic: " Demanding or Deferring? The Economic Value of Communication with Attitude "
Date & Time: 13th April 2015, Monday, 3:45-4:45 PM
Venue: Newcastle University Business School, 313
5 Barrack Road, Newcastle upon Tyne, NE1 4SE
Abstract: This paper builds a bridge between theory (Farrell 1993, Rabin 1994) and experiment (Ledyard 1995; Charness and Dufwenberg 2006, 2010) to explain why rich, multi-meaning language may allow coordination to occur more easily than restrictive language. We generalize the analysis of free-form communication in coordination games by introducing two-dimensional meaning: E-meaning (the requested equilibrium) as well as A-meaning (the request’s “attitude”). Our model predicts that free-form simultaneous messaging will improve coordination because people both use and respond to messages’ requested equilibrium and attitude. Indeed, we show that effective use of multiple meaning messages allows people to achieve a "negotiated equilibrium" (Rabin, 1994) using one-shot messages. We test our model using controlled experiments in both Washington D.C. and Shanghai. Consistent with our model, we find (i) natural language cheap-talk does include both equilibrium requests and attitude; (ii) people respond to both the requested equilibrium and attitude when making action decisions; and (iii) the use of attitude improves coordination by enabling “negotiation” in one-shot simultaneous communication. Moreover, while males and females recognize and respond to equilibrium and attitude equally well, we find females are more likely to send more demanding requests than males, while males generally focus more on the equilibrium outcome than the attitude. Our research helps to explain why free-form communication more than restricted signaling facilitates coordination, and also sheds light on effective approaches to the design of communication systems that promote efficient economic outcomes.
Coffee break: 4:45pm-5pm
Speaker: Professor Gordon Brown, University of Warwick
Topic: " Relative Rank Theory and Anchoring "
Date & Time: 13th April 2015, Monday, 5-6 PM
Venue: Newcastle University Business School, 313
Abstract: How do people value states of health, decide on the price they are willing to pay for a product, or determine the appropriate amount of damages to award against a polluting company? Many models of choice, in economics in particular, assume that the relevant preferences, while noisy, can be understood as context-independent. However many experimental observations, such as anchoring effects, have been taken to suggest that people’s judgments and preferences are unstable and context-dependent. Using anchoring as an example, we hypothesised that judgments and preferences might instead appear stable under contextual manipulations when expressed in belief-relative coordinates (e.g., as participants’ implicit beliefs about the relative rank of the Mississippi’s length within the distribution of all river lengths) rather than expressed as absolute quantities in real-world coordinates (e.g., the length of the Mississippi in miles). We observed typical anchoring effects on participants’ judgments (e.g., of river lengths; Study 1) and preferences (willingness to pay [WTP] for a coffee mug; Study 2). However, anchor values also influenced participants’ estimates of the relevant background distributions (e.g., river lengths and coffee mug prices). The ranked positions of participants’ estimates and WTPs within the elicited distributions were unaffected by the anchors: People’s estimates and preferences were invariant under anchoring when described in relative rank space despite appearing unstable when expressed in real-world coordinates.
Last modified: Wed, 16 Sep 2015 17:11:25 BST