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Do Players’ Beliefs or Risk Attitudes Determine The Equilibrium Selections in 2x2 Coordination Games?

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Author Info

  • Thomas Neumann

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

  • Bodo Vogt

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

Abstract

This study focuses on the question whether it is risk aversion or the beliefs of players that explains the strategic choices in 2x2 coordination games. In a laboratory experiment, we elicit the risk attitudes by using lottery choices. Furthermore, using a quadratic scoring rule, subjects’ beliefs about the choice of the opponent are elicited directly. Our data show that participants’ behavior is not explained by risk attitude, but rather is explained as their best response to their stated first order beliefs.

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File URL: http://www.ww.uni-magdeburg.de/fwwdeka/femm/a2009_Dateien/2009_24.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 09024.

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Length: 12 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:mag:wpaper:09024

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Related research

Keywords: experimental economics; coordination games; equilibrium selection; first order beliefs;

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References

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  1. Carlsson, H. & Damme, E.E.C. van, 1993. "Global games and equilibrium selection," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-154416, Tilburg University.
  2. Antonio Cabrales & Rosemarie Nagel & Roc Armenter, 2007. "Equilibrium selection through incomplete information in coordination games: an experimental study," Experimental Economics, Springer, Springer, vol. 10(3), pages 221-234, September.
  3. Selten, Reinhard, 1995. "An axiomatic theory of a risk dominance measure for bipolar games with linear incentives," Games and Economic Behavior, Elsevier, Elsevier, vol. 8(1), pages 213-263.
  4. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, Springer, vol. 10(2), pages 171-178, June.
  5. Keser, Claudia & Ehrhart, Karl-Martin & Berninghaus, Siegfried K., 1998. "Coordination and local interaction: experimental evidence," Economics Letters, Elsevier, Elsevier, vol. 58(3), pages 269-275, March.
  6. J. B. Van Huyck & R. C. Battalio & R. O. Beil, 2010. "Tacit coordination games, strategic uncertainty, and coordination failure," Levine's Working Paper Archive 661465000000000393, David K. Levine.
  7. Reinhard Selten, 1998. "Axiomatic Characterization of the Quadratic Scoring Rule," Experimental Economics, Springer, Springer, vol. 1(1), pages 43-61, June.
  8. Cooper, Russell & De Jong, Douglas V. & Forsythe, Robert & Ross, Thomas W., 1992. "Forward induction in coordination games," Economics Letters, Elsevier, Elsevier, vol. 40(2), pages 167-172, October.
  9. Frank Heinemann & Rosemarie Nagel & Peter Ockenfels, 2004. "The Theory of Global Games on Test: Experimental Analysis of Coordination Games with Public and Private Information," Econometrica, Econometric Society, Econometric Society, vol. 72(5), pages 1583-1599, 09.
  10. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1644-1655, December.
  11. Miguel A. Costa-Gomes & Georg Weizs�cker, 2008. "Stated Beliefs and Play in Normal-Form Games," Review of Economic Studies, Oxford University Press, Oxford University Press, vol. 75(3), pages 729-762.
  12. Harsanyi, John C., 1995. "A new theory of equilibrium selection for games with complete information," Games and Economic Behavior, Elsevier, Elsevier, vol. 8(1), pages 91-122.
  13. Yaw Nyarko & Andrew Schotter, 2002. "An Experimental Study of Belief Learning Using Elicited Beliefs," Econometrica, Econometric Society, Econometric Society, vol. 70(3), pages 971-1005, May.
  14. Goeree, Jacob K. & Holt, Charles A. & Palfrey, Thomas R., 2003. "Risk averse behavior in generalized matching pennies games," Games and Economic Behavior, Elsevier, Elsevier, vol. 45(1), pages 97-113, October.
  15. 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.
  16. 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.
  17. repec:kap:expeco:v:1:y:1998:i:1:p:43-62 is not listed on IDEAS
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Cited by:
  1. Berninghaus, Siegfried K. & Haller, Sven & Krüger, Tyll & Neumann, Thomas & Schosser, Stephan & Vogt, Bodo, 2013. "Risk attitude, beliefs, and information in a Corruption Game – An experimental analysis," Journal of Economic Psychology, Elsevier, Elsevier, vol. 34(C), pages 46-60.

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