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Strategic behaviour in Schelling dynamics: Theory and experimental evidence

Author

Listed:
  • Juan M. Benito-Ostolaza

    (Departamento de Economía.Universidad Pública de Navarra, Campus Arrosadia s/n. 31006 Pamplona. Navarra. Spain.)

  • Pablo Brañas-Garza

    (Middlesex University London, Business School, London NW4 4BT, England.)

  • Penélope Hernández

    (Departamento de Análisis Económico y ERI-CES, Facultad de Economía. Avda. dels Tarongers, s/n. 46022 Valencia. Spain.
    ERI-CES and Department of Applied Economics II, University of Valencia. Facultad de Economía. Avenida dels Tarongers s/n, 46022 Valencia, Spain.)

Abstract

In this paper we experimentally test Schelling’s (1971) segregation model and confirm the striking result of segregation. In addition, we extend Schelling’s model theoretically by adding strategic behaviour and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far from full segregation. We run experiments for this extended Schelling model, and find that the percentage of full segregated societies notably decreases with the cost of moving and that the degree of segregation depends on the distribution of strategic subjects.

Suggested Citation

  • Juan M. Benito-Ostolaza & Pablo Brañas-Garza & Penélope Hernández, 2015. "Strategic behaviour in Schelling dynamics: Theory and experimental evidence," Working Papers 1504, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1504
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    References listed on IDEAS

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    12. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-493, May.
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    Citations

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    Cited by:

    1. Coralio Ballester & Penélope Hernández, 2010. "Bounded Rationality," ThE Papers 10/10, Department of Economic Theory and Economic History of the University of Granada..
    2. Benito-Ostolaza, Juan M. & Sanchis-Llopis, Juan A., 2014. "Training strategic thinking: Experimental evidence," Journal of Business Research, Elsevier, vol. 67(5), pages 785-789.
    3. Juan M. Benito-Ostolaza & Penélope Hernández & Juan A. Sanchis-Llopis, 2015. "Are individuals with higher cognitive ability expected to play more strategically?," Working Papers 1507, Department of Applied Economics II, Universidad de Valencia.
    4. Benito-Ostolaza, Juan M. & Hernández, Penélope & Sanchis-Llopis, Juan A., 2016. "Do individuals with higher cognitive ability play more strategically?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 5-11.

    More about this item

    Keywords

    Subgame perfect equilibrium; segregation; experimental games;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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