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Task Complexity, Equilibrium Selection, and Learning: An Experimental Study

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  • Teck-Hua Ho

    (Anderson Graduate School of Management, University of California, Los Angeles, California 90095)

  • Keith Weigelt

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

We consider several coordination games with multiple equilibria each of which is a different division of a fixed pie. Laboratory experiments are conducted to address whether "task complexity" affects the selection of equilibrium by subjects. Three measures of task complexity---cardinality of choice space, level of iterative knowledge of rationality, and level of iterative knowledge of strategy---are manipulated and tested. Results suggest the three measures can predict choice behavior. Since strategically equivalent games can have different task complexity measures, our results imply that subjects are sensitive to game form presentation. We also fit data using three adaptive learning models: 1) Cournot, 2) Fictitious Play, and 3) Payoff Reinforcement, in increasing order of required cognitive effort. The Fictitious Play model, which tracks only cumulative frequencies of opponents' past behaviors fits the data best.

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File URL: http://dx.doi.org/10.1287/mnsc.42.5.659
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 42 (1996)
Issue (Month): 5 (May)
Pages: 659-679

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Handle: RePEc:inm:ormnsc:v:42:y:1996:i:5:p:659-679

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Related research

Keywords: task complexity; equilibrium selection; learning; an experimental study;

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Cited by:
  1. McKinney, C. Nicholas & Van Huyck, John B., 2013. "Eureka Learning: Heuristics and response time in perfect information games," Games and Economic Behavior, Elsevier, vol. 79(C), pages 223-232.
  2. Miguel Costa-Gomes & Vincent P. Crawford & Bruno Broseta, . "Cognition and Behavior in Normal-Form Games:An Experimental Study," Discussion Papers 00/45, Department of Economics, University of York.
  3. Reina, Livia, 2003. "Negotiators' cognition: An experimental study on bilateral, integrative negotiation," Dresden Discussion Paper Series in Economics 05/03, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  4. Lehmann-Waffenschmidt, Marco & Reina, Livia, 2003. "Coalition formation in multilateral negotiations with a potential for logrolling: An experimental analysis of negotiators' cognition processes," Dresden Discussion Paper Series in Economics 17/03, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  5. Colin F. Camerer & Teck-Hua Ho & Juin-Kuan Chong, 2004. "A Cognitive Hierarchy Model of Games," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 861-898, August.
  6. Christina Fang & Sari Carp & Zur Shapira, 2011. "Prior Divergence: Do Researchers and Participants Share the Same Prior Probability Distributions?," Discussion Paper Series dp587, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  7. Shafran, Aric P., 2012. "Learning in games with risky payoffs," Games and Economic Behavior, Elsevier, vol. 75(1), pages 354-371.
  8. Antoni Bosch-Dom�nech & Nicolaas J. Vriend, 2008. "On the Role of Non-equilibrium Focal Points as Coordination Devices," Working Papers 621, Queen Mary, University of London, School of Economics and Finance.
  9. Colin Camerer & Teck-Hua Ho & Juin Kuan Chong, 2003. "A cognitive hierarchy theory of one-shot games: Some preliminary results," Levine's Bibliography 506439000000000495, UCLA Department of Economics.
  10. Chen, Yan & Khoroshilov, Yuri, 2003. "Learning under limited information," Games and Economic Behavior, Elsevier, vol. 44(1), pages 1-25, July.
  11. Raul Lopez-Perez & Agnes Pinter & Hubert Janos Kiss, 2013. "Does Payoff Equity Facilitate Coordination? A test of Schelling's Conjecture," IEHAS Discussion Papers 1346, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

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