Discontinuous and continuous stochastic choice and coordination in the lab
(2022) In Journal of Economic Theory 206.- Abstract
We experimentally test theoretical predictions on equilibrium selection in a two-player coordination (investment) game. Through a minimal visual variation, our design prompts participants to play strategies whereby investing probability is either continuous or discontinuous in the payoff-relevant state. When participants use continuous strategies, average behavior is consistent with play in the risk-dominant equilibrium, the unique theoretical prediction. When they use discontinuous strategies, average behavior is closer to the payoff-dominant equilibrium strategy. In this case, the theory predicts multiple equilibria, for which we find no support. Additionally, we extend the theory to heterogeneous populations: the set of equilibria... (More)
We experimentally test theoretical predictions on equilibrium selection in a two-player coordination (investment) game. Through a minimal visual variation, our design prompts participants to play strategies whereby investing probability is either continuous or discontinuous in the payoff-relevant state. When participants use continuous strategies, average behavior is consistent with play in the risk-dominant equilibrium, the unique theoretical prediction. When they use discontinuous strategies, average behavior is closer to the payoff-dominant equilibrium strategy. In this case, the theory predicts multiple equilibria, for which we find no support. Additionally, we extend the theory to heterogeneous populations: the set of equilibria monotonically decreases in the proportion of players who use continuous strategies.
(Less)
- author
- Goryunov, Maxim and Rigos, Alexandros LU
- organization
- publishing date
- 2022-12
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Continuous stochastic choice, Coordination, Global games, Information acquisition, Laboratory experiment, Perception
- in
- Journal of Economic Theory
- volume
- 206
- article number
- 105557
- publisher
- Elsevier
- external identifiers
-
- scopus:85139294640
- ISSN
- 0022-0531
- DOI
- 10.1016/j.jet.2022.105557
- language
- English
- LU publication?
- yes
- additional info
- Funding Information: We thank Pol Campos-Mercade, Erik Mohlin, Stephen Morris, Alexander Nesterov, Jakub Steiner, Petra Thiemann, Isabel Trevino, and Erik Wengström for discussions and suggestions at various stages of this project, as well as the Editor, Faruk Gul, an anonymous associate editor, and two anonymous referees for their constructive comments. We also thank audiences at LGTC2019, Lisbon Meetings 2019, the Fall 2019 CNEE Workshop, the 2021 workshop on Attention in Decision Making in Lund, and seminar participants at Edinburgh and Lund. Goryunov is grateful to CERGE-EI Foundation for the Career Integration Fellowship and to Nazarbayev University for the support under FDCRGP, grant reference 021220FD4751 . Rigos is grateful to Erik Mohlin and Handelsbankens Forskningsstiftelser (grant # P2016-0079:1 ) for funding. Funding Information: We thank Pol Campos-Mercade, Erik Mohlin, Stephen Morris, Alexander Nesterov, Jakub Steiner, Petra Thiemann, Isabel Trevino, and Erik Wengström for discussions and suggestions at various stages of this project, as well as the Editor, Faruk Gul, an anonymous associate editor, and two anonymous referees for their constructive comments. We also thank audiences at LGTC2019, Lisbon Meetings 2019, the Fall 2019 CNEE Workshop, the 2021 workshop on Attention in Decision Making in Lund, and seminar participants at Edinburgh and Lund. Goryunov is grateful to CERGE-EI Foundation for the Career Integration Fellowship and to Nazarbayev University for the support under FDCRGP, grant reference 021220FD4751. Rigos is grateful to Erik Mohlin and Handelsbankens Forskningsstiftelser (grant #P2016-0079:1) for funding. Publisher Copyright: © 2022 The Author(s)
- id
- 0d36befb-928b-4794-a0bd-5e60e5401b67
- date added to LUP
- 2023-08-15 13:17:55
- date last changed
- 2023-08-15 14:45:12
@article{0d36befb-928b-4794-a0bd-5e60e5401b67, abstract = {{<p>We experimentally test theoretical predictions on equilibrium selection in a two-player coordination (investment) game. Through a minimal visual variation, our design prompts participants to play strategies whereby investing probability is either continuous or discontinuous in the payoff-relevant state. When participants use continuous strategies, average behavior is consistent with play in the risk-dominant equilibrium, the unique theoretical prediction. When they use discontinuous strategies, average behavior is closer to the payoff-dominant equilibrium strategy. In this case, the theory predicts multiple equilibria, for which we find no support. Additionally, we extend the theory to heterogeneous populations: the set of equilibria monotonically decreases in the proportion of players who use continuous strategies.</p>}}, author = {{Goryunov, Maxim and Rigos, Alexandros}}, issn = {{0022-0531}}, keywords = {{Continuous stochastic choice; Coordination; Global games; Information acquisition; Laboratory experiment; Perception}}, language = {{eng}}, publisher = {{Elsevier}}, series = {{Journal of Economic Theory}}, title = {{Discontinuous and continuous stochastic choice and coordination in the lab}}, url = {{http://dx.doi.org/10.1016/j.jet.2022.105557}}, doi = {{10.1016/j.jet.2022.105557}}, volume = {{206}}, year = {{2022}}, }