Östling, Robert () (Institute for International Economic Studies, Stockholm University) Wang, Joseph Tao-yi () (Department of Economics, National Taiwan University) Chou, Eileen () (Management and Organization, Kellogg School of Management, Northwestern University) Camerer, Colin F. () (Division for the Humanities and Social Sciences, California Institute of Technology)
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Game theory is usually difficult to test precisely in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct a rare such test using field data from the Swedish lowest unique positive integer (LUPI) game. In the LUPI game, players pick positive integers and whoever chose the lowest unique number wins a fixed prize. Theoretical equilibrium predictions are derived assuming Poisson-distributed uncertainty about the number of players, and tested using both field and laboratory data. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Initial responses can be rationalized by a cognitive hierarchy model and convergence toward equilibrium by a simple learning-by-imitation model.
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Length: 84 pages Date of creation: 14 Aug 2007 Date of revision:
30 Oct 2007 Handle: RePEc:hhs:hastef:0671
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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 C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism
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