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Teaching Nash Equilibrium and Dominance: A Classroom Experiment on the Beauty Contest

Author

Listed:
  • Virtudes Alba-Fernández
  • Pablo Brañas-Garza
  • Francisca Jiménez-Jiménez
  • Javier Rodero-Cosano

Abstract

Abstract: The authors' aim in this article was to show how the use of classroom experiments may be a good pedagogical tool to teach the Nash equilibrium (NE) concept. The basic game is a version of the beauty contest game (BCG), a simple guessing game in which repetition lets students react to other players' choices and converge iteratively to the equilibrium solution. The authors perform this experiment with undergraduate students with no previous training in game theory. After four rounds, they observe a clear decreasing tendency in the average submitted number in all groups. Thus, the findings show that by playing a repeated BCG, students quickly learn how to reach the NE solution.

Suggested Citation

  • Virtudes Alba-Fernández & Pablo Brañas-Garza & Francisca Jiménez-Jiménez & Javier Rodero-Cosano, 2006. "Teaching Nash Equilibrium and Dominance: A Classroom Experiment on the Beauty Contest," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(3), pages 305-322, July.
  • Handle: RePEc:taf:jeduce:v:37:y:2006:i:3:p:305-322
    DOI: 10.3200/JECE.37.3.305-322
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    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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