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Essays in Information Economics and Experimental Economics

Kwon, O Sub
http://rave.ohiolink.edu/etdc/view?acc_num=osu1616865724520915

Abstract Details

2021, Doctor of Philosophy, Ohio State University, Economics.
In this dissertation, I use laboratory experiments to test theories in information economics and auction theory. Chapters 1 and 2 study basic models of information economics, and Chapters 3 studies sequential auction. In Chapter 1, I study how people perform risky experimentation to generate information when they can also learn from each other. I develop and experimentally test a modified version of the Keller et al. (2005) two-armed bandit model that can trivialize the posterior calculation for any sequence of signal realizations. I find that 1) when experimenting alone, the median subject generates almost exactly the same amount as the theoretical prediction, that 2) when experimenting with others, the median subject tends to generate more information than when alone, which is against the theoretical prediction, and that 3) the subjects only react to the posterior belief and do not condition their actions on other players’ past actions. In Chapter 2, I test the model of Bayesian persuasion (Kamenica and Gentzkow, 2011) through minimal design. I adopt an experimental design in which the Sender chooses a partition of the state space instead of an information structure. I find that 1) the Senders overall behavior is qualitatively optimal in the sense that they set the posterior probability of the weaker signal near zero, but 2) they quantitatively do not best respond to the Receivers in the sense that the stronger signals are systematically lower than what the Receivers require, resulting in a persistently high rejection rate of the stronger signal. Moreover, the uncertainty about the requirement of the Receivers is the key impeding factor for the Senders to persuade in that 3) once I replace the Receivers with a robot that plays a known strategy, most Senders learn to play the optimal strategy. Finally, In Chapter 3, I experimentally investigate bidding behavior in two-stage sequential ascending clock auctions. The equilibrium given by Milgrom and Weber (2000) predicts that the prices of the two goods sold are exactly the same regardless of the value realization. I show that the same equilibrium can be obtained by iterated deletion of weakly dominated strategies in my setting. Despite such a strong prediction, I find little support for equilibrium-like behavior. Instead I find that the prices are on-average the same in three-bidder auctions and slightly declining in five-bidder auctions. Moreover, I find that the on average equal prices are achieved not through the information revealed by the dropouts as the theory predicts, instead it is mainly driven by the interaction of different types of off-equilibrium behaviors. Thus, even when I shut down the dropout information altogether, my results mostly remain intact. I discuss how my findings relate to the declining price anomaly discovered by Ashenfelter (1989).
Dan Levin (Committee Co-Chair)
John Kagel (Committee Co-Chair)
James Peck (Committee Member)
John Rehbeck (Committee Member)
126 p.
Economics
Information Economics; Experimental Economics

Recommended Citations

Citations

  • Kwon, O. S. (2021). Essays in Information Economics and Experimental Economics [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1616865724520915

    APA Style (7th edition)

  • Kwon, O Sub. Essays in Information Economics and Experimental Economics. 2021. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1616865724520915.

    MLA Style (8th edition)

  • Kwon, O Sub. "Essays in Information Economics and Experimental Economics." Doctoral dissertation, Ohio State University, 2021. http://rave.ohiolink.edu/etdc/view?acc_num=osu1616865724520915

    Chicago Manual of Style (17th edition)

osu1616865724520915
171
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