Georgalos, Konstantinos, Ray, Indrajit and SenGupta, Sonali
2020.
Nash versus coarse correlation.
Experimental Economics
23
, pp. 1178-1204.
10.1007/s10683-020-09647-x
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Abstract
We run a laboratory experiment to test the concept of coarse correlated equilibrium (Moulin and Vial in Int J Game Theory 7:201–221, 1978), with a two-person game with unique pure Nash equilibrium which is also the solution of iterative elimination of strictly dominated strategies. The subjects are asked to commit to a device that randomly picks one of three symmetric outcomes (including the Nash point) with higher ex-ante expected payoff than the Nash equilibrium payoff. We find that the subjects do not accept this lottery (which is a coarse correlated equilibrium); instead, they choose to play the game and coordinate on the Nash equilibrium. However, given an individual choice between a lottery with equal probabilities of the same outcomes and the sure payoff as in the Nash point, the lottery is chosen by the subjects. This result is robust against a few variations. We explain our result as selecting risk-dominance over payoff dominance in equilibrium.
Item Type: | Article |
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Date Type: | Publication |
Status: | Published |
Schools: | Business (Including Economics) |
Subjects: | H Social Sciences > HB Economic Theory |
Publisher: | Springer Verlag (Germany) |
ISSN: | 1386-4157 |
Date of First Compliant Deposit: | 2 March 2020 |
Date of Acceptance: | 3 February 2020 |
Last Modified: | 23 Nov 2020 13:11 |
URI: | http://orca-mwe.cf.ac.uk/id/eprint/130045 |
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