Ten Little Treasures of Game Theory and Ten Intuitive Contradictions

Abstract

This paper reports laboratory data for a series of two-person games that are played only once. These games span the standard categories: static and dynamic games with complete and incomplete information. For each game, the treasure is a treatment for which behavior conforms quite nicely to the predictions of the Nash equilibrium or relevant refinement. In each case we change a key payoff parameter in a manner that does not alter the equilibrium predictions, but this theoretically neutral payoff change has a major (often dramatic) effect on observed behavior. These contradictions are generally consistent with simple economic intuition and with a model of iterated noisy introspection for one-shot games.Nash equilibrium, noncooperative games, experiments, bounded rationality, introspection