: This paper reports an experiment comparing three stag huntgames that have the same best-response correspondence. The games havethe same expected payoff from the mixed equilibrium, but differ in thepecuniary incentive a player has to play a best response to other mixtures.In each game, risk dominance conflicts with payoff dominance and selectsan inefficient pure strategy equilibrium. We find statistically andeconomically significant evidence that the expected earnings differencehelps...

Acknowledgments: The National Science Foundation and Texas Advanced Research Program provided financial support. A faculty development leave at the University of Pittsburgh provided time for Van Huyck to write this paper. A central question in economics is how do markets coordinate the behavior of anonymous decision makers in a many person decentralized economy. Economic theory has traditionally addressed the question using the equilibrium method, which abstracts away from an important aspect of the general coordination problem, because it assumes an equilibrium. For abstract games, an equilibrium is defined as an assignment to each player of a strategy that is best for him when the others use the strategies assigned to them. The relevance of this abstract mutual consistency requirement for economic modeling is an open question, see Kreps (1990). The requirement has two related problems: disequilibrium and coordination failure. First, the mutual consistency requirement of an equilibrium assignment is not an implication of individual rationality, but an additional strong assumption. Individual rationality means internal consistency and internally consistent beliefs and actions of different players may not be mutually consistent. In economies with stable and unique equilibrium points, the influence of inconsistent beliefs and actions would disappear over time, see Robert Lucas (1987). The power of the equilibrium method derives from its ability to abstract from the complicated dynamic process that induces equilibrium and to abstract from the historical accident that initiated the process. Second, there is often more than one equilibrium assignment. For example, multiple Pareto ranked equilibria arise in both macroeconomic models with production, search, or trading externalities and microeconomic models of monopolistic competition, technology adoption and diffusion, and manufacturing with non-convexities. These superficially dissimilar market and non-market models share the common property that a decision maker's best " level of effort " depends positively upon other decision makers' " level of effort. " This property is called strategic complementarity in the coordination failure literature, see Cooper and John (1988). When these equilibria can be Pareto ranked it is possible for historical accident and dynamic process to lead to inefficient equilibria, that is, coordination failure. Consequently, understanding the origin of mutually consistent behavior is an essential complement to the theory of equilibrium points. The experimental method provides a tractable and constructive approach to the equilibrium selection problem. This chapter reviews experiments using a class of generic market statistic games with multiple equilibria, which are strictly Pareto ranked, and it …

This paper uses the experimental method to investigate behavior in a coordination game when the information available to subjects is limited to their feasible choices and their experienced payoffs. In the experiment subjects converge to an absorbing state at rates that are orders of magnitude faster than reinforcement learning algorithms, but slower than under complete information. This state is very close to a mutual best response outcome. All cohorts converged to the market statistic predicted by the interior equilibrium regardless of the information conditions or the stability conditions.

This paper reports an experiment designed to detect the influence of strategic uncertainty on behavior in order statistic coordination games, which arise when a player's best response is an order statistic of the cohort's action combination. Unlike previous experiments using order statistic coordination games, the new experiment holds the payoff function constant and only changes cohort size and order statistic.

This paper reports an experiment investigating how assignments improve economic efficiency in a modified version of the standard voluntary-contributions mechanism. The experiment uses a non-binding message that makes common information assignments in the repeated game. A credible assignment is one actually followed by the participants. It turns out to be difficult to credibly assign the symmetric efficient outcome in four person cohorts, but we did discover one assignment that was credible in the last match of the evolutionary repeated game.

Most learning experiments involve repeated play of exactly the same situation and, hence, can not discriminate between learning to use a deductive principle and other forms of routine learning. In this paper, subjects confront a sequence of similar, but not identical, bargaining games all of which can be solved using the same deductive principles. Conventions based on these deductive principles emerge within 70 periods in 5 of 26 eight-person cohorts. We found no economically significant differences between all male and all female cohorts. Journal of Economic Literature Classification Numbers: C72, C78, C92, D83.

In this paper we use the experimental method to determine whether reputation is a substitute for commitment in the Peasant-Dictator game. Reputation is an imperfect substitute for commitment in the experiment. It is less efficient on average. Its effectiveness as a substitute declines as the return on investment declines. However, there are cohorts that converge to a convention exhibiting high levels of trust and trustworthiness in which behavior under reputation is indistinguishable from behavior under commitment.

EconometricaVolume 69, Issue 3 p. 749-764 Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games Raymond Battalio, Raymond Battalio Dept. of Economics, Texas A&M University, TX 77843, USA,Search for more papers by this authorLarry Samuelson, Larry Samuelson Dept. of Economics, University of Wisconsin-Madison, Madison,WI 53706, USASearch for more papers by this authorJohn Van Huyck, John Van Huyck Dept. of Economics, Texas A&M University, TX 77843, USA,Search for more papers by this author Raymond Battalio, Raymond Battalio Dept. of Economics, Texas A&M University, TX 77843, USA,Search for more papers by this authorLarry Samuelson, Larry Samuelson Dept. of Economics, University of Wisconsin-Madison, Madison,WI 53706, USASearch for more papers by this authorJohn Van Huyck, John Van Huyck Dept. of Economics, Texas A&M University, TX 77843, USA,Search for more papers by this author First published: 12 December 2003 https://doi.org/10.1111/1468-0262.00212Citations: 143AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat Citing Literature Volume69, Issue3May 2001Pages 749-764 RelatedInformation

This paper reports an experiment to determine whether subjects will learn to stop using a strictly dominated strategy that can be an above average reply. It is difficult to find an experimental design that eliminates the play of the strictly dominated strategy completely. The least effective treatment used money to motivate behavior directly. The most effective treatment used a binary-lottery with money prizes to induce preferences, but even this treatment required giving subjects plenty of experience. Doing so reduced the play of the strictly dominated strategy to around 10 percent by the end of a session. There is no evidence for the explosive cycling needed to make the strictly dominated strategy an above average reply.

We use a dynamical systems approach to model the origin of bargaining conventions and report the results of a symmetric bargaining game experiment. Our experiment also provides evidence on the psychological salience of symmetry and efficiency. The observed behavior in the experiment was systematic, replicable, and roughly consistent with the dynamical systems approach. For instance, we do observe unequal-division conventions emerging in communities of symmetrically endowed subjects.