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Testing Game Theory in the Field: Swedish LUPI Lottery Games

Author

Listed:
  • Östling, Robert

    (Institute for International Economic Studies, Stockholm University)

  • Wang, Joseph Tao-yi

    (Department of Economics, National Taiwan University)

  • Chou, Eileen

    (Management and Organization, Kellogg School of Management, Northwestern University)

  • Camerer, Colin F.

    (Division for the Humanities and Social Sciences, California Institute of Technology)

Abstract

Game theory is usually difficult to test precisely in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such test using field data from the Swedish lowest unique positive integer (LUPI) game. In the LUPI game, players pick positive integers and whoever chose the lowest unique number wins a fixed prize. Theoretical equilibrium predictions are derived assuming Poisson-distributed uncertainty about the number of players, and tested using both field and laboratory data. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Some of the deviations from equilibrium can be rationalized by a cognitive hierarchy model.

Suggested Citation

  • Östling, Robert & Wang, Joseph Tao-yi & Chou, Eileen & Camerer, Colin F., 2007. "Testing Game Theory in the Field: Swedish LUPI Lottery Games," SSE/EFI Working Paper Series in Economics and Finance 671, Stockholm School of Economics, revised 15 Dec 2010.
    • Handle: RePEc:hhs:hastef:0671
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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