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Strategic behavior in Schelling dynamics: A new result and experimental evidence

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Author Info

  • Juan Miguel Benito

    ()
    (Departamento de Economia, Universidad Publica de Navarra, Spain)

  • Pablo Branas-Garz

    ()
    (Departamento de Teoria e Historia Economica, Universidad de Granada, Spain and Economic Science Institute Affliate, Chapman University)

  • Penelope Hernandez

    ()
    (Departamento de Analisis Economico y ERI-CES, Spain)

  • Juan A. Sanchis

    ()
    (Departamento de Estructura Econ´omica y ERI-CES, Spain)

Abstract

In this paper we experimentally test Schelling’s (1971) segregation model and confirm the striking result of segregation. In addition, we extend Schelling’s model theoretically by adding strategic behavior and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far for full segregation. We run experiments for this extended Schelling model. We find that the percentage of strategic players dramatically increases with the cost of moving and that the degree of segregation depends on the distribution of rational subjects.

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File URL: http://www.chapman.edu/ESI/wp/Branas-Garza_StrategicBehaviorSchellingDynamics.pdf
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Bibliographic Info

Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 11-14.

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Length: 38 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:chu:wpaper:11-14

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Keywords: Subgame perfect equilibrium; segregation; experimental games;

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References

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  1. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  2. Romans Pancs & Nicolaas J. Vriend, 2003. "Schelling's Spatial Proximity Model of Segregation Revisited," Computing in Economics and Finance 2003 63, Society for Computational Economics.
  3. Ariel Rubinstein, 2006. "Instinctive and Cognitive Reasoning: A Study of Response Times," Working Papers 2006.36, Fondazione Eni Enrico Mattei.
  4. David Card & Alexandre Mas & Jesse Rothstein, 2008. "Tipping and the Dynamics of Segregation," The Quarterly Journal of Economics, MIT Press, vol. 123(1), pages 177-218, 02.
  5. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz, 2005. "Experimental Analysis of Neighborhood Effects," NBER Working Papers 11577, National Bureau of Economic Research, Inc.
  6. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
  7. Zhang, Junfu, 2004. "Residential segregation in an all-integrationist world," Journal of Economic Behavior & Organization, Elsevier, vol. 54(4), pages 533-550, August.
  8. Ariel Rubinstein, 2007. "Instinctive and Cognitive Reasoning: Response Times Study," Levine's Bibliography 321307000000001011, UCLA Department of Economics.
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Citations

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Cited by:
  1. Coralio Ballester & Penélope Hernández, 2010. "Bounded Rationality," ThE Papers 10/10, Department of Economic Theory and Economic History of the University of Granada..
  2. Benito-Ostolaza, Juan M. & Sanchis-Llopis, Juan A., 2014. "Training strategic thinking: Experimental evidence," Journal of Business Research, Elsevier, vol. 67(5), pages 785-789.

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