Virtual Observability in Sequential Play

TL;DR

This paper investigates how the timing of moves influences behavior in sequential games without observable actions, finding that timing affects outcomes in some games but not others, challenging the idea that virtual observability always impacts strategic choices.

Contribution

It provides experimental evidence on the effects of timing in games with a unique equilibrium, highlighting that virtual observability influences behavior differently across game types.

Findings

Timing affects behavior in the sequential Traveler's Dilemma, aligning it closer to equilibrium.

Timing has no effect on behavior in the Trust Game without observability.

The influence of timing depends on the specific game structure and equilibrium properties.

Abstract

When players make sequential decisions that are unobservable to one another, their behavior can nonetheless be influenced by knowing who moves first. This sequential structure, often referred to as "virtual observability," suggests that timing alone can shape expectations and choices, even when no information is revealed. The original notion of virtual observability, however, is an equilibrium refinement based on the timing structure and has no bite in games with a unique equilibrium. In this paper, we experimentally examine whether timing still affects behavior in such games, using the Traveler's Dilemma and the Trust Game. We find that in the sequential Traveler's Dilemma without observability, first movers tend to behave closer to the equilibrium prediction than in the simultaneous version. In contrast, timing without observability has no effect on behavior in the Trust Game.