Who acts more like a game theorist? Group and individual play in a sequential market game and the effect of the time horizon

Previous experimental results on one-shot sequential two-player games show that group decisions are closer to the subgame-perfect Nash equilibrium than individual decisions. We extend the analysis of intergroup versus interindividual decision-making by running both one-shot and repeated sessions of a simple two-player sequential market game (Stackelberg duopoly). Whereas in one-shot markets we find no significant differences in the behavior of groups and individuals, in repeated markets we find that the behavior of groups is further away from the subgame-perfect equilibrium of the stage game than that of individuals. To a large extent, this result is independent of the method of eliciting choices (sequential or strategy method), the matching protocol (random- or fixed-matching), and the econometric method used to account for observed first- and second-mover behavior. We discuss various possible explanations for the differential effect that the time horizon of interaction has on the extent of individual and group playersʼ (non)conformity with subgame perfectness.