Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217181 
Year of Publication: 
2019
Citation: 
[Journal:] Quantitative Economics [ISSN:] 1759-7331 [Volume:] 10 [Issue:] 4 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2019 [Pages:] 1825-1849
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
In dynamic environments where the strategic setting evolves across time, the specific rule governing the transitions can substantially alter the incentives agents face. This is particularly true when history-dependent strategies are used. In a laboratory study, we examine whether subjects respond to the transition rule and internalize its effects on continuation values. Our main comparison is between an endogenous transition where future states directly depend on current choices, and exogenous transitions where the future environment is random and independent of actions. Our evidence shows that subjects readily internalize the effect of the dynamic game transition rule on their incentives, in line with history-dependent theoretical predictions.
Subjects: 
Dynamic games
state transition rule
history dependent play
JEL: 
C73
C92
D90
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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