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Optimization incentive and relative riskiness in experimental coordination games

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Author Info
Dimitri Dubois () (LAMETA (UMR CNRS 5474), Université Montpellier 1, avenue de la mer, site Richter, C.S. 79606, 34960 Montpellier cédex 2, France.)
Marc Willinger () (LAMETA (UMR CNRS 5474), Université Montpellier 1, avenue de la mer, site Richter, C.S. 79606, 34960 Montpellier cédex 2, France.)
Phu Nguyen-Van () (THEMA-CNRS, Université de Cergy-Pontoise, 33 Boulevard du Port, F-95011 Cergy-Pontoise Cedex, France.)

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Abstract

We compare the experimental results of three stag-hunt games. In contrast to Battalio et al. (2001), our design keeps the riskiness ratio of the payoff-dominant and the risk-dominant strategies at a constant level as the optimisation premium is increased. We define the riskiness ratio as the relative payoff range of the two strategies. We find that decreasing the riskiness ratio while keeping the optimization premium constant increases sharply the frequency of the risk-dominant strategy. On the other hand an increase of the optimization premium with a constant riskiness ratio has no effect on the choice frequencies. Finally, we confirm the dynamic properties found by Battalio et al. that increasing the optimization premium favours best-response and sensitivity to the history of play.

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Publisher Info
Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 02.

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Length: 14 pages
Date of creation: 2009
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Handle: RePEc:dpc:wpaper:0209

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Related research
Keywords: Coordination game; Game theory; Experimental economics.;

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Find related papers by 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
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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References listed on IDEAS
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  1. Straub, Paul G., 1995. "Risk dominance and coordination failures in static games," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(4), pages 339-363. [Downloadable!] (restricted)
  2. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November. [Downloadable!] (restricted)
  3. Cooper, Russell, et al, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 739-71, May. [Downloadable!] (restricted)
  4. COOPER, R. & DEJONG, D.V. & FORSYTHE, R. & Tom Ross, 1989. "Communication In Coordination Games," Carleton Industrial Organization Research Unit (CIORU) 89-07, Carleton University, Department of Economics.
  5. Schmidt, David & Shupp, Robert & Walker, James M. & Ostrom, Elinor, 2003. "Playing safe in coordination games:: the roles of risk dominance, payoff dominance, and history of play," Games and Economic Behavior, Elsevier, vol. 42(2), pages 281-299, February. [Downloadable!] (restricted)
  6. Harsanyi John C., 1995. "A New Theory of Equilibrium Selection for Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 10(2), pages 318-332, August. [Downloadable!] (restricted)
  7. Battalio, Raymond & Samuelson, Larry & Van Huyck, John, 2001. "Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games," Econometrica, Econometric Society, vol. 69(3), pages 749-64, May.
  8. Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1991. "Strategic Uncertainty, Equilibrium Selection, and Coordination Failure in Average Opinion Games," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 885-910, August. [Downloadable!] (restricted)
  9. Van Huyck, John B & Battalio, Raymond C & Rankin, Frederick W, 1997. "On the Origin of Convention: Evidence from Coordination Games," Economic Journal, Royal Economic Society, vol. 107(442), pages 576-96, May. [Downloadable!] (restricted)
  10. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September. [Downloadable!] (restricted)
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  11. Friedman, Daniel, 1996. "Equilibrium in Evolutionary Games: Some Experimental Results," Economic Journal, Royal Economic Society, vol. 106(434), pages 1-25, January. [Downloadable!] (restricted)
  12. Cachon, Gerard P & Camerer, Colin F, 1996. "Loss-Avoidance and Forward Induction in Experimental Coordination Games," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 165-94, February. [Downloadable!] (restricted)
  13. Anderlini, Luca, 1999. "Communication, Computability, and Common Interest Games," Games and Economic Behavior, Elsevier, vol. 27(1), pages 1-37, April. [Downloadable!] (restricted)
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