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Game Theory For Playing Games: Sophistication In A Negative-Externality Experiment

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  • JOHN M. SPRAGGON
  • ROBERT J. OXOBY

Abstract

"We explore the extent to which the lack of Nash payoff maximization in experimental games is attributable to the "sophistication" of participants (i.e., their understanding of strategic decision making and profit-maximizing decisions). To this end, we compare the behaviors of sophisticated participants (i.e., those who have been exposed to the concepts of game theory) against those of a more standard subject pool in a moral hazard environment. Results suggest that sophisticated subjects are significantly more likely to adopt strategies predicted by standard theory and arrive at a Nash equilibrium. "("JEL "C72, C91, C92, D63, D64) Copyright (c) 2008 Western Economic Association International.

Suggested Citation

  • John M. Spraggon & Robert J. Oxoby, 2009. "Game Theory For Playing Games: Sophistication In A Negative-Externality Experiment," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 467-481, July.
  • Handle: RePEc:bla:ecinqu:v:47:y:2009:i:3:p:467-481
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gaston Giordana & Marc Willinger, 2013. "Regulatory instruments for monitoring ambient pollution," Chapters,in: Handbook on Experimental Economics and the Environment, chapter 7, pages 193-232 Edward Elgar Publishing.
    2. Robert Oxoby, 2013. "Paretian dictators: constraining choice in a voluntary contribution game," Constitutional Political Economy, Springer, vol. 24(2), pages 125-138, June.
    3. Cason, Timothy N. & Gangadharan, Lata, 2013. "Empowering neighbors versus imposing regulations: An experimental analysis of pollution reduction schemes," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 469-484.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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