32,595 research outputs found
Equilibrium Selection Through Incomplete Information in Coordination Games: An Experimental Study
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 âglobalâ games of Carlsson and van Damme, Econometrica,
61, 989â1018, 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.Publicad
A Formal Separation Between Strategic and Nonstrategic Behavior
It is common in multiagent systems to make a distinction between "strategic"
behavior and other forms of intentional but "nonstrategic" behavior: typically,
that strategic agents model other agents while nonstrategic agents do not.
However, a crisp boundary between these concepts has proven elusive. This
problem is pervasive throughout the game theoretic literature on bounded
rationality and particularly critical in parts of the behavioral game theory
literature that make an explicit distinction between the behavior of
"nonstrategic" level-0 agents and "strategic" higher-level agents (e.g., the
level-k and cognitive hierarchy models). Overall, work discussing bounded
rationality rarely gives clear guidance on how the rationality of nonstrategic
agents must be bounded, instead typically just singling out specific decision
rules and informally asserting them to be nonstrategic (e.g., truthfully
revealing private information; randomizing uniformly). In this work, we propose
a new, formal characterization of nonstrategic behavior. Our main contribution
is to show that it satisfies two properties: (1) it is general enough to
capture all purportedly "nonstrategic" decision rules of which we are aware in
the behavioral game theory literature; (2) behavior that obeys our
characterization is distinct from strategic behavior in a precise sense
Homo Sapiens Sapiens Meets Homo Strategicus at the Laboratory
Homo Strategicus populates the vast plains of Game Theory. He knows all logical implications of his knowledge (logical omniscience) and chooses optimal strategies given his knowledge and beliefs (rationality). This paper investigates the extent to which the logical capabilities of Homo Sapiens Sapiens resemble those possessed by Homo Strategicus. Controlling for other-regarding preferences and beliefs about the rationality of others, we show, in the laboratory, that the ability of Homo Sapiens Sapiens to perform complex chains of iterative reasoning is much better than previously thought. Subjects were able to perform about two to three iterations of reasoning on average.iterative reasoning; depth of reasoning; logical omniscience; rationality; experiments; other-regarding preferences
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