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A Simple Questionnaire Can Change Everything - Are Strategy Choices in Coordination Games Stable?

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Author Info

  • Siegfried K. Berninghaus

    (Karlsruhe Institute of Technology (KIT), Institute for Economic Theory and Statistics)

  • Lora Todorova

    (Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management)

  • Bodo Vogt

    (Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management)

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    Abstract

    This paper presents results from an experiment designed to study the effect of self reporting risk preferences on strategy choices made in a subsequently played 2 X 2 coordination game. The main finding is that the act of answering a questionnaire about one's own risk preferences significantly alters strategic behavior. Within a best response correspondence framework, this result can be explained by a change in either risk preferences or beliefs. We find that self reporting risk preferences induces an increase in subjects' risk aversion while keeping their beliefs unchanged. Our findings raise some questions about the stability of strategy choices in coordination games.

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    File URL: http://pubdb.wiwi.uni-jena.de/pdf/wp_2011_057.pdf
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    Bibliographic Info

    Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2011-057.

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    Date of creation: 01 Dec 2011
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    Handle: RePEc:jrp:jrpwrp:2011-057

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    Related research

    Keywords: coordination game; questionnaire; risk preferences; beliefs; best response correspondence;

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    References

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    1. Reinhard Selten & Abdolkarim Sadrieh & Klaus Abbink, 1999. "Money Does Not Induce Risk Neutral Behavior, but Binary Lotteries Do even Worse," Theory and Decision, Springer, Springer, vol. 46(3), pages 213-252, June.
    2. Kenneth Clark & Stephen Kay & Martin Sefton, 2001. "When are Nash equilibria self-enforcing? An experimental analysis," International Journal of Game Theory, Springer, Springer, vol. 29(4), pages 495-515.
    3. Lisa R. Anderson & Jennifer M. Mellor, 2008. "Are Risk Preferences Stable? Comparing an Experimental Measure with a Validated Survey-Based Measure," Working Papers, Department of Economics, College of William and Mary 74, Department of Economics, College of William and Mary.
    4. 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, Elsevier, vol. 42(2), pages 281-299, February.
    5. Rutstrom, E. Elizabet & Wilcox, Nathaniel, 2008. "Stated versus inferred beliefs: A methodological inquiry and experimental test," MPRA Paper 11852, University Library of Munich, Germany.
    6. Markus K. Brunnermeier & Stefan Nagel, 2008. "Do Wealth Fluctuations Generate Time-Varying Risk Aversion? Micro-evidence on Individuals," American Economic Review, American Economic Association, American Economic Association, vol. 98(3), pages 713-36, June.
    7. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262582384, December.
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