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Believe it or not: Experimental evidence on sunspot equilibria with social networks

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  • Battiston, Pietro
  • Harrison, Sharon G.

Abstract

Models with sunspot equilibria have long been a topic of interest among economists. It then became an interesting question to ask whether there is empirical support for their existence. One approach to answer this question is through lab experiments. A growing literature has not only successfully reproduced these equilibria in the lab, but also improved our understanding of the conditions under which they might emerge. We study the importance of information provision, and how it affects convergence dynamics. We run a laboratory experiment in which individuals, connected through a network, directly observe the actions of their neighbors as well as aggregate information. By manipulating both the type of information available and the structure of the network, we show that general information about other players' behavior hinders coordination, while information specifically related to the sunspot enhances it.

Suggested Citation

  • Battiston, Pietro & Harrison, Sharon G., 2024. "Believe it or not: Experimental evidence on sunspot equilibria with social networks," Games and Economic Behavior, Elsevier, vol. 143(C), pages 223-247.
    • Handle: RePEc:eee:gamebe:v:143:y:2024:i:c:p:223-247
    DOI: 10.1016/j.geb.2023.11.011
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    More about this item

    Keywords

    Sunspot equilibrium; Laboratory experiment; Coordination; Social networks; Communication;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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