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

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Author Info

  • Juan Miguel Benito

    ()
    (Universidad Pública de Navarra)

  • Pablo Brañas-Garza

    ()
    (Universidad de Granada)

  • Penélope Hernández

    ()
    (ERI-CES)

  • Juan A. Sanchis

    ()
    (ERI-CES)

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 theo- retically 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.uv.es/erices/RePEc/WP/2012/0312.pdf
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Bibliographic Info

Paper provided by University of Valencia, ERI-CES in its series Discussion Papers in Economic Behaviour with number 0312.

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Date of creation: Mar 2012
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Handle: RePEc:dbe:wpaper:0312

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Related research

Keywords: Subgame perfect equilibrium; segregation; experimental games;

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  1. 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.
  2. 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.
  3. Ariel Rubinstein, 2007. "Instinctive and Cognitive Reasoning: A Study of Response Times," Economic Journal, Royal Economic Society, vol. 117(523), pages 1243-1259, October.
  4. Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
  5. Pancs, Romans & Vriend, Nicolaas J., 2007. "Schelling's spatial proximity model of segregation revisited," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 1-24, February.
  6. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  7. Ariel Rubinstein, 2007. "Instinctive and Cognitive Reasoning: Response Times Study," Levine's Bibliography 321307000000001011, UCLA Department of Economics.
  8. Zhang, Junfu, 2004. "Residential segregation in an all-integrationist world," Journal of Economic Behavior & Organization, Elsevier, vol. 54(4), pages 533-550, August.
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Cited by:
  1. Juan M. Benito-Ostolaza & Juan A. Sanchis-Llopis, 2013. "Training Strategic Thinking: Experimental Evidence," Working Papers 1323, Department of Applied Economics II, Universidad de Valencia.
  2. Coralio Ballester & Penélope Hernández, 2010. "Bounded Rationality," ThE Papers 10/10, Department of Economic Theory and Economic History of the University of Granada..

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