Doctoral Dissertation Research DRMS: Experimental Evidence and Measurement of Inter-Temporal Strategic Inefficiency

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This study considers efficiency from the perspective of repeated strategic interaction. Namely, the study considers several types of games that are simplified representations of more complex real world situations in which interaction occurs at multiple periods over an arbitrarily long time horizon. The researcher will examine how augmentation of the payoff structure in these games can provide incentives for agents to tacitly collude at a more efficient outcome over repeated play. The issues raised herein are important not only from a mechanism design standpoint, but also have applications in repeated oligopoly interaction. Primarily, we are concerned with how the relative magnitudes of payoffs may make a particular outcome more attractive for agents to coordinate upon in comparison to other outcomes, which may be socially inferior.For each type of strategic situation studied, we assess the relative and absolute efficiencies of experimental subject pairs in terms of average per period payoffs to see whether or not agents can effectively coordinate to extract as high a payoff as possible given the constraints of the game. Knowledge of how to induce such efficiencies is important to both policy makers, who may determine the strategic parameters of a game, and to agents confined to a particular set of strategic parameters.