Equilibrium Selection Through Incomplete Information in Coordination Games: An Experimental Study

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dc.contributor.author Cabrales, Antonio
dc.contributor.author Nagel, Rosemarie
dc.contributor.author Armenter, Roc
dc.date.accessioned 2009-03-04T13:33:08Z
dc.date.available 2009-03-04T13:33:08Z
dc.date.issued 2007
dc.identifier.bibliographicCitation Experimental Economics, 2007, vol.10, p. 221-234
dc.identifier.issn 1573-6938
dc.identifier.uri http://hdl.handle.net/10016/3472
dc.description.abstract We perform an experiment on a pure coordination game with uncertainty about the payoffs. Our game is closely related to models that have been used in many macroeconomic and financial applications to solve problems of equilibrium indeterminacy. In our experiment, each subject receives a noisy signal about the true payoffs. This game (inspired by the “global” games of Carlsson and van Damme, Econometrica, 61, 989–1018, 1993) has a unique strategy profile that survives the iterative deletion of strictly dominated strategies (thus a unique Nash equilibrium). The equilibrium outcome coincides, on average, with the risk-dominant equilibrium outcome of the underlying coordination game. In the baseline game, the behavior of the subjects converges to the theoretical prediction after enough experience has been gained. The data (and the comments) suggest that this behavior can be explained by learning. To test this hypothesis, we use a different game with incomplete information, related to a complete information game where learning and prior experiments suggest a different behavior. Indeed, in the second treatment, the behavior did not converge to equilibrium within 50 periods in some of the sessions.We also run both games under complete information. The results are sufficiently similar between complete and incomplete information to suggest that risk-dominance is also an important part of the explanation.
dc.format.mimetype text/plain
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher Springer
dc.rights © Economic Science Association
dc.subject.other Global games
dc.subject.other Risk dominance
dc.subject.other Equilibrium selection
dc.subject.other common knowledge
dc.title Equilibrium Selection Through Incomplete Information in Coordination Games: An Experimental Study
dc.type article
dc.type.review PeerReviewed
dc.description.status Publicado
dc.relation.publisherversion http://www.springerlink.com/content/4131x7193u5r0712/fulltext.pdf
dc.relation.publisherversion http://dx.doi.org/10.1007/s10683-007-9183-z
dc.subject.eciencia Economía
dc.identifier.doi 10.1007/s10683-007-9183-z
dc.rights.accessRights openAccess
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