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The …rst two authors, Joseph Tao-yi Wang and Robert Östling, contributed equally to this paper. We

By Robert Östling, Joseph Tao-yi, Wang Eileen Chou, Colin F. Camerer, Erik Lindqvist, Stefan Molin, Noah Myung, Rosemarie Nagel, Charles Noussair and Carsten Schmidt

Abstract

In the lowest unique positive integer (LUPI) game, players pick positive integers and the player who chose the lowest unique number (not chosen by anyone else) wins a …xed prize. We derive theoretical equilibrium predictions, assuming fully rational players with Poisson-distributed uncertainty about the number of players. We also derive predictions for boundedly rational players using quantal response equilibrium and a cognitive hierarchy of rationality steps with quantal responses. The theoretical predictions are tested using both …eld data from a Swedish gambling company, and laboratory data from a scaled-down version of the …eld game. The …eld and lab data show similar patterns: in early rounds, players choose very low and very high numbers too often, and avoid focal (“round”) numbers. However, there is some learning and a surprising degree of convergence toward equilibrium. The cognitive hierarchy model with quantal responses ca

Year: 2013
OAI identifier: oai:CiteSeerX.psu:10.1.1.352.4347
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