How Sensitive is Strategy Selection in Coordination Games?
AbstractThis paper presents the results of an experiment designed to study the effect produced on strategy choices when a subject reports risk preferences on a risk scale before engaging in a 2x2 coordination game. The main finding is that the act of stating one's own risk preferences significantly alters strategic behavior. In particular, subjects tend to choose the risk dominant strategy more often when they have previously stated their attitudes to risk. 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 does not induce a change in subjects' beliefs. We argue that the behavioral arguments of strategy selection, such as focal points, framing and uncertain preferences can explain our results.
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Bibliographic InfoPaper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 120020.
Length: 32 pages
Date of creation: Sep 2012
Date of revision:
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coordination game; questionnaire; risk scale; risk preferences; beliefs; focal points; framing; uncertain preferences;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-24 (All new papers)
- NEP-BEC-2012-11-24 (Business Economics)
- NEP-CBE-2012-11-24 (Cognitive & Behavioural Economics)
- NEP-EVO-2012-11-24 (Evolutionary Economics)
- NEP-EXP-2012-11-24 (Experimental Economics)
- NEP-GTH-2012-11-24 (Game Theory)
- NEP-HPE-2012-11-24 (History & Philosophy of Economics)
- NEP-NET-2012-11-24 (Network Economics)
- NEP-UPT-2012-11-24 (Utility Models & Prospect Theory)
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