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2011-10-26Buch DOI: 10.18452/4358
The Power of Sunspots
dc.contributor.authorFehr, Dietmar
dc.contributor.authorHeinemann, Frank
dc.contributor.authorLlorente-Saguer, Aniol
dc.date.accessioned2017-06-16T00:30:01Z
dc.date.available2017-06-16T00:30:01Z
dc.date.created2011-11-04
dc.date.issued2011-10-26
dc.date.submitted2011-10-26
dc.identifier.issn1860-5664
dc.identifier.urihttp://edoc.hu-berlin.de/18452/5010
dc.description.abstractWe present an experiment in which extrinsic information (signals) may generate sunspot equilibria. The underlying coordination game has a unique symmetric non-sunspot equilibrium, which is also risk-dominant. Other equilibria can be ordered according to risk dominance. We compare treatments with different salient, but extrinsic signals. By increasing the precision of private signals, we manipulate the available public information, which allows us to measure the force of extrinsic signals. We also vary the number of signals and combine public and private signals, allowing us to see how subjects aggregate available (and possibly irrelevant) information. Results indicate that sunspot equilibria emerge naturally if there are salient (but extrinsic) public signals. However, salient private signals of high precision may also cause sunspot-driven behavior, even though this is no equilibrium. The higher the precision of signals and the easier they can be aggregated, the more powerful they are in dragging behavior away from the risk-dominant to risk-dominated strategies. Sunspot-driven behavior may lead to welfare losses and exert negative externalities on agents, who do not receive extrinsic signals.eng
dc.language.isoeng
dc.publisherHumboldt-Universität zu Berlin, Wirtschaftswissenschaftliche Fakultät
dc.subjectcoordination gameseng
dc.subjectstrategic uncertainty sunspot equilibriaeng
dc.subjectirrelevant informationeng
dc.subject.ddc330 Wirtschaft
dc.titleThe Power of Sunspots
dc.typebook
dc.subtitleAn Experimental Analysis
dc.identifier.urnurn:nbn:de:kobv:11-100196233
dc.identifier.doihttp://dx.doi.org/10.18452/4358
local.edoc.container-titleSonderforschungsbereich 649: Ökonomisches Risiko
local.edoc.pages46
local.edoc.type-nameBuch
local.edoc.container-typeseries
local.edoc.container-type-nameSchriftenreihe
local.edoc.container-volume2011
local.edoc.container-issue70
local.edoc.container-year2011
local.edoc.container-erstkatid2195055-6

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