The Effects of Communication and Information Availability in an Experimental Study of a Three-Person Game

Abstract

This study investigated the effects of six communication/information conditions on the outcomes reached by three-person groups playing a characteristic function game. The game was played by a monopolist and two weaker players. The conditions consisted of six combinations which varied the amount of information available to the players and their ability to communicate with one another. The investigation focused on the effects of the independent variables and the relationship between the data and several game theoretic solution concepts. The results indicated that the monopolist's payoffs depended to a large extent on the communication/information conditions. Announcement of the payoff division and the availability of messages tended to reduce his payoffs. In conditions where no messages were allowed, the monopolist's payoffs increased over time. Although the data diverged significantly from the core, the situations which contributed to greater competition resulted in outcomes closer to the core. A comparison between von Neumann-Morgenstern solutions and the more general class of subsolutions indicated that subsolutions were more reflective of the behavior observed. In addition, the results over the entire set of conditions closely approximated the Shapley value, which has recently been shown to be a risk neutral player's expected utility for playing the game. Directions for future research were suggested.

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