How Large Looms the Ghost of the Past? State-Dependence vs. Heterogeneity in the Stag Hunt
In games with multiple, Pareto-rankable equilibria and repeated play, does a history of playing an inefficient equilibrium make it harder for the players to reach the efficient equilibrium? In other words, can people Ôget stuckÕ in bad equilibria? Previous studies have found support for this, but they have relied on naturally occurring variation in precedent. I implement randomized control to establish that precedent effects are important, but that natural occurring variation exaggerates the importance of precedent. I present evidence that some of the endogeneity of naturally occurring precedents is due to variation in risk-attitudes. This is because in the coordination games used, the inefficient equilibrium is associated with a safe strategy. Understanding the causal effect of precedent is important since many development problems, such as institutional change and technological advancement, are viewed as coordination games with Pareto-rankable equilibria. Moreover an appreciation of how potential heterogeneity may interact with the policy is essential when trying to lift groups out of bad precedents.
|Date of creation:||Aug 2009|
|Date of revision:|
|Contact details of provider:|| Postal: 4400 University Drive, MSN 1B2, Fairfax, VA 22030|
Web page: http://ices.gmu.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jones, Garett, 2008. "Are smarter groups more cooperative? Evidence from prisoner's dilemma experiments, 1959-2003," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 489-497, December.
- Andersen, Steffen & Harrison, Glenn W. & Lau, Morten Igel & Rutström, Elisabet E., 2009.
"Behavioral Econometrics for Psychologists,"
04-2009, Copenhagen Business School, Department of Economics.
- Steffen Andersen & Glenn W. Harrison & Morten Igel Lau & Elisabet E. Rutstroem, 2007. "Behavioral Econometrics for Psychologists," Working Papers 2007_08, Durham University Business School.
- Andersen, Steffen & Harrison, Glenn W. & Lau, Morten Igel & Rutström, Elisabeth E., 2007. "Behavioral Econometrics for Psychologists," Working Papers 18-2007, Copenhagen Business School, Department of Economics.
- Margo, Robert A., 2006. "Economic Origins of Dictatorship and Democracy. By Daron Acemoglu and James A. Robinson. New York: Cambridge University Press, 2006. Pp. vii, 416. $35," The Journal of Economic History, Cambridge University Press, vol. 66(02), pages 532-534, June.
- Douglass C. North, 2005.
"Introduction to Understanding the Process of Economic Change
[Understanding the Process of Economic Change]," Introductory Chapters, Princeton University Press.
- Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, vol. 62(6), pages 1291-1326, November.
- Blume, Andreas & Ortmann, Andreas, 2007. "The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria," Journal of Economic Theory, Elsevier, vol. 132(1), pages 274-290, January.
- Devetag, Giovanna, 2005. "Precedent transfer in coordination games: An experiment," Economics Letters, Elsevier, vol. 89(2), pages 227-232, November.
- Roberto A. Weber, 2006. "Managing Growth to Achieve Efficient Coordination in Large Groups," American Economic Review, American Economic Association, vol. 96(1), pages 114-126, March.
- Acemoglu,Daron & Robinson,James A., 2009.
"Economic Origins of Dictatorship and Democracy,"
Cambridge University Press, number 9780521671422, November.
- Schotter, A. & Sopher, B., 2001.
"Social Learning and Coordination Conventions in Inter-Generational Games: An Experimental Study,"
01-10, C.V. Starr Center for Applied Economics, New York University.
- Andrew Schotter & Barry Sopher, 2003. "Social Learning and Coordination Conventions in Intergenerational Games: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 498-529, June.
- Bacharach, Michael & Bernasconi, Michele, 1997. "The Variable Frame Theory of Focal Points: An Experimental Study," Games and Economic Behavior, Elsevier, vol. 19(1), pages 1-45, April.
When requesting a correction, please mention this item's handle: RePEc:gms:wpaper:1010. 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: (Stan Tsirulnikov)
If references are entirely missing, you can add them using this form.