Insurance and coordination-clue motives can be operationally distinguished by bidding tests.
Evidence
We offer a player alternative games like Fig. 33 that differ only in substituting values ranging from 0 to 9 for the 5’s in that matrix, leaving the 10’s and zeros as they are. We then ask him to “value” the games for us—to indicate how much he would pay for the opportunity to play the game with a live partner and real money payoffs. (Alternatively we ask him how much he’d pay for the privilege of playing the different variants in place of the one with 5.) If his response is fairly insensitive to variations in that particular payoff as long as it is positive, and if nevertheless he attaches a high value to the game with some positive payoff and attaches something like a random-strategy expected value for the game with zeros as in Fig. 32, we can conclude that the lower-left and upper-right payoffs are mainly of interest to him as signals. — Thomas C. Schelling, The Strategy of Conflict, 871
Categorization
- DEFINE: Offers an operational, behavioral test to distinguish the insurance motive from the coordination-clue motive for choosing a jointly-oriented strategy.
- XREF: connects to: Bidding patterns reveal whether a payoff functions as coordination signal or insurance. — Thomas C. Schelling, The Strategy of Conflict, 871; Mutual insurance companies exemplify genuine mutualistic cooperation. — Nicolas Baumard, A mutualistic approach to morality: The…, 76; The derivative is a single instrument fusing insurance motives with betting motives. — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 90
Related
- Bidding patterns reveal whether a payoff functions as coordination signal or insurance. (similarity 0.92)
Broader Connections
- Bidding patterns reveal whether a payoff functions as coordination signal or insurance.
#expands(0.90) — Thomas C. Schelling, The Strategy of Conflict, 871