Virtual Observability in Sequential Play

2025-11-30

AI Summary

This study investigates whether “virtual observability”—i.e., knowledge of move order (who moves first) without observability of actual decisions—affects behavior in games with a unique equilibrium. Using experimental economics, we design sequential and simultaneous versions of the Traveler’s Dilemma and the Trust Game, rigorously controlling information structures to eliminate genuine information transmission. Results show that in the Traveler’s Dilemma, sequentiality significantly increases first-movers’ convergence toward the Nash equilibrium; no such effect emerges in the Trust Game. This work departs from conventional equilibrium refinement approaches by providing the first systematic empirical test of how move-order structure alone—under conditions of unobservable decisions—shapes strategic behavior. It demonstrates game-specific effects of timing, offering novel evidence for temporal heuristics under bounded rationality. (138 words)

Technology Category

• Game Theory and Economic Paradigms: Imperfect Information
• Multiagent Systems: Mechanism Design
• Reasoning under Uncertainty: Sequential Decision Making

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Security and Privacy: Large-scale security measurements
• Responsible Web: Human-perceived consequences of algorithmic deployment on the web

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.

Problem

• Examines timing's effect on unobservable sequential decisions
• Tests virtual observability in games with unique equilibrium
• Compares Traveler's Dilemma and Trust Game behavior differences

Innovation

• Sequential decisions influence unobservable player behavior
• Timing shapes expectations in games without information revelation
• Experimental testing with Traveler's Dilemma and Trust Game