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Contagion: An Experimental Study

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  • Dean Corbae

    (University of Pittsburgh)

  • John Duffy

    (University of Pittsburgh)

Abstract

Does the network structure in which economic agents interact affect their ability to coordinate of high payoff investments in environments with multiple equilibria? We conduct experiments with paid human subjects in an effort to resolve this important question. Our experiment tests whether two different exogenously imposed interaction structures, the local interaction structure of Ellison (1993) and the uniform matching structure of Kandoori, Mailath, and Rob (1993) or Young (1993), affects the ability of human subjects to coordinate on a payoff dominant Nash equilibrium in a simple coordination game where the unique payoff dominant equilibrium initially coincides with and later differs from the risk dominant Nash equilibrium. The preliminary experimental findings provide insight on how certain payoff dominated strategies may spread through an economy - our definition of a contagion. These findings are also used to construct the appropriate model of individual learning behavior that gives rise to a contagion within the coordination game environments that we study.

Suggested Citation

  • Dean Corbae & John Duffy, 2000. "Contagion: An Experimental Study," Econometric Society World Congress 2000 Contributed Papers 1005, Econometric Society.
  • Handle: RePEc:ecm:wc2000:1005
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    Cited by:

    1. Alejandro Lee-Penagos, 2016. "Learning to Coordinate: Co-Evolution and Correlated Equilibrium," Discussion Papers 2016-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    2. Bizer, Kilian & Meub, Lukas & Proeger, Till & Spiwoks, Markus, 2014. "Strategic coordination in forecasting: An experimental study," University of Göttingen Working Papers in Economics 195, University of Goettingen, Department of Economics.

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