IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v162y2016icp195-208.html
   My bibliography  Save this article

A behavioral study of “noise” in coordination games

Author

Listed:
  • Mäs, Michael
  • Nax, Heinrich H.

Abstract

‘Noise’ in this study, in the sense of evolutionary game theory, refers to deviations from prevailing behavioral rules. Analyzing data from a laboratory experiment on coordination in networks, we tested ‘what kind of noise’ is supported by behavioral evidence. This empirical analysis complements a growing theoretical literature on ‘how noise matters’ for equilibrium selection. We find that the vast majority of decisions (96%) constitute myopic best responses, but deviations continue to occur with probabilities that are sensitive to their costs, that is, less frequent when implying larger payoff losses relative to the myopic best response. In addition, deviation rates vary with patterns of realized payoffs that are related to trial-and-error behavior. While there is little evidence that deviations are clustered in time or space, there is evidence of individual heterogeneity.

Suggested Citation

  • Mäs, Michael & Nax, Heinrich H., 2016. "A behavioral study of “noise” in coordination games," Journal of Economic Theory, Elsevier, vol. 162(C), pages 195-208.
  • Handle: RePEc:eee:jetheo:v:162:y:2016:i:c:p:195-208
    DOI: 10.1016/j.jet.2015.12.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053115002215
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, January.
    2. Timothy N. Cason & Daniel Friedman & ED Hopkins, 2014. "Cycles and Instability in a Rock--Paper--Scissors Population Game: A Continuous Time Experiment," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 112-136.
    3. Germano, Fabrizio & Lugosi, Gabor, 2007. "Global Nash convergence of Foster and Young's regret testing," Games and Economic Behavior, Elsevier, vol. 60(1), pages 135-154, July.
    4. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-1071, September.
    5. Erev, Ido & Roth, Alvin E, 1998. "Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria," American Economic Review, American Economic Association, vol. 88(4), pages 848-881, September.
    6. repec:syd:wpaper:2123/9993 is not listed on IDEAS
    7. Peski, Marcin, 2010. "Generalized risk-dominance and asymmetric dynamics," Journal of Economic Theory, Elsevier, vol. 145(1), pages 216-248, January.
    8. Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1990. "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure," American Economic Review, American Economic Association, vol. 80(1), pages 234-248, March.
    9. Bergin, James & Lipman, Barton L, 1996. "Evolution with State-Dependent Mutations," Econometrica, Econometric Society, vol. 64(4), pages 943-956, July.
    10. Heinrich H. Nax & Maxwell N. Burton-Chellew & Stuart A. West & H. Peyton Young, 2013. "Learning in a Black Box," PSE Working Papers hal-00817201, HAL.
    11. Lawrence Blume, 1996. "Population Games," Game Theory and Information 9607001, EconWPA.
    12. Kandori Michihiro & Rob Rafael, 1995. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Journal of Economic Theory, Elsevier, vol. 65(2), pages 383-414, April.
    13. Hart, Sergiu & Mas-Colell, Andreu, 2006. "Stochastic uncoupled dynamics and Nash equilibrium," Games and Economic Behavior, Elsevier, vol. 57(2), pages 286-303, November.
    14. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    15. Sawa, Ryoji, 2014. "Coalitional stochastic stability in games, networks and markets," Games and Economic Behavior, Elsevier, vol. 88(C), pages 90-111.
    16. Xu, Bin & Zhou, Hai-Jun & Wang, Zhijian, 2013. "Cycle frequency in standard Rock–Paper–Scissors games: Evidence from experimental economics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(20), pages 4997-5005.
    17. Pradelski, Bary S.R. & Young, H. Peyton, 2012. "Learning efficient Nash equilibria in distributed systems," Games and Economic Behavior, Elsevier, vol. 75(2), pages 882-897.
    18. Heinrich H. Nax & Maxwell N. Burton-Chellew & Stuart A. West & H. Peyton Young, 2013. "Learning in a Black Box," Working Papers hal-00817201, HAL.
    19. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
    20. Richard Mckelvey & Thomas Palfrey, 1998. "Quantal Response Equilibria for Extensive Form Games," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 9-41, June.
    21. David Butler & Andrea Isoni & Graham Loomes, 2012. "Testing the ‘standard’ model of stochastic choice under risk," Journal of Risk and Uncertainty, Springer, vol. 45(3), pages 191-213, December.
    22. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    23. Blume, Lawrence E., 2003. "How noise matters," Games and Economic Behavior, Elsevier, vol. 44(2), pages 251-271, August.
    24. Sergiu Hart & Andreu Mas-Colell, 2003. "Uncoupled Dynamics Do Not Lead to Nash Equilibrium," American Economic Review, American Economic Association, vol. 93(5), pages 1830-1836, December.
    25. Newton, Jonathan, 2012. "Coalitional stochastic stability," Games and Economic Behavior, Elsevier, vol. 75(2), pages 842-854.
    26. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
    27. Foster, Dean P. & Young, H. Peyton, 2006. "Regret testing: learning to play Nash equilibrium without knowing you have an opponent," Theoretical Economics, Econometric Society, vol. 1(3), pages 341-367, September.
    28. Friedman, Daniel & Ostrov, Daniel N., 2013. "Evolutionary dynamics over continuous action spaces for population games that arise from symmetric two-player games," Journal of Economic Theory, Elsevier, vol. 148(2), pages 743-777.
    29. Crawford, Vincent P., 1991. "An "evolutionary" interpretation of Van Huyck, Battalio, and Beil's experimental results on coordination," Games and Economic Behavior, Elsevier, vol. 3(1), pages 25-59, February.
    30. Alós-Ferrer, Carlos & Netzer, Nick, 2010. "The logit-response dynamics," Games and Economic Behavior, Elsevier, vol. 68(2), pages 413-427, March.
    31. Naidu, Suresh & Hwang, Sung-Ha & Bowles, Samuel, 2010. "Evolutionary bargaining with intentional idiosyncratic play," Economics Letters, Elsevier, vol. 109(1), pages 31-33, October.
    32. Myatt, David P. & Wallace, Chris C., 2004. "Adaptive play by idiosyncratic agents," Games and Economic Behavior, Elsevier, vol. 48(1), pages 124-138, July.
    33. Young, H. Peyton, 2011. "Commentary: John Nash and evolutionary game theory," Games and Economic Behavior, Elsevier, vol. 71(1), pages 12-13, January.
    34. Newton, Jonathan, 2012. "Recontracting and stochastic stability in cooperative games," Journal of Economic Theory, Elsevier, vol. 147(1), pages 364-381.
    35. Young, H. Peyton, 2009. "Learning by trial and error," Games and Economic Behavior, Elsevier, vol. 65(2), pages 626-643, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrej Angelowski & Daniela Di Cagno & Werner Güth & Francesca Marazzi & Luca Panaccione, 2016. "Do All "Bad Apples" Taste the Same? Experimental Analysis of Heterogeneity in Local Public Good Provision," Working Papers CESARE 4/2016, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    2. Benndorf, Volker & Martínez-Martínez, Ismael, 2017. "Perturbed best response dynamics in a hawk–dove game," Economics Letters, Elsevier, vol. 153(C), pages 61-64.
    3. Schüssler, Katharina & Schüssler, Michael & Mühlbauer, Daniel, 2018. "Individual Differences and Contribution Sequences in Threshold Public Goods," Rationality and Competition Discussion Paper Series 88, CRC TRR 190 Rationality and Competition.
    4. repec:gam:jgames:v:8:y:2017:i:4:p:50-:d:119204 is not listed on IDEAS
    5. Lim, Wooyoung & Neary, Philip R., 2016. "An experimental investigation of stochastic adjustment dynamics," Games and Economic Behavior, Elsevier, vol. 100(C), pages 208-219.

    More about this item

    Keywords

    Behavioral game theory; Discrete choice; Evolution; Learning; Logit response; Stochastic stability; Trial-and-error;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:162:y:2016:i:c:p:195-208. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.