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Platform selection in the lab

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  • Heggedal, Tom-Reiel
  • Helland, Leif

Abstract

Emerging literature explores experimental platform selection games. These games converge rapidly on the superior platform under a wide range of conditions. We replicate the remarkable results of Hossain and Morgan (2009) in which such a game tips almost perfectly to the superior platform. Next, we show that platform coordination fails when seemingly innocent increases in out-of-equilibrium payoffs are introduced. The inflated payoffs keep the best reply structure unchanged and do not influence players’ security levels. Our design allows control for the explanatory force of risk dominance. We find that equilibrium selection theory is unable to account for coordination failure while observed behavior is consistent with non-rational learning. Furthermore, and contrary to the literature, we find that efficiency suffers when an inferior platform is granted initial monopoly.

Suggested Citation

  • Heggedal, Tom-Reiel & Helland, Leif, 2014. "Platform selection in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 168-177.
    • Handle: RePEc:eee:jeborg:v:99:y:2014:i:c:p:168-177
    DOI: 10.1016/j.jebo.2013.12.004
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    More about this item

    Keywords

    Equilibrium selection; Laboratory experiment; Network effects; Platform selection;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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