The quality of the signal matters — a note on imperfect observability and the timing of moves

Abstract

In a recent study Huck and Müller [Games Econ. Behav. 31 (2), 2000, 174–190] report that — in contrast to Bagwell’s [Games Econ. Behav. 8 (1995) 271–280] prediction — first movers in a simple experimental market do not lose their commitment power in the presence of noise. The present note shows that it is the quality of the signal and not the knowledge about the physical timing of moves that is responsible for these experimental results. Additionally, the findings reported here provide further evidence that the positional order protocol cannot induce non-equilibrium play.