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Experientia docet: professionals play minimax in laboratory experiments

Palacios-Huerta, Ignacio and Volij, Oscar (2008) Experientia docet: professionals play minimax in laboratory experiments. Econometrica, 76 (1). pp. 71-115. ISSN 0012-9682

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Abstract

We study how professional players and college students play zero-sum two-person strategic games in a laboratory setting. We first ask professionals to play a 2 × 2 game that is formally identical to a strategic interaction situation that they face in their natural environment. Consistent with their behaviour in the field, they play very close to the equilibrium of the game. In particular, (i) they equate their strategies’ payoffs to the equilibrium ones and (ii) they generate sequences of choices that are serially independent. In sharp contrast, however, we find that college students play the game far from the equilibrium predictions. We then study the behaviour of professional players and college students in the classic O’Neill 4 × 4 zero-sum game, a game that none of the subjects has encountered previously, and find the same differences in the behaviour of these two pools of subjects. The transfer of skills and experience from the familiar field to the unfamiliar laboratory observed for professional players is relevant to evaluate the circumstances under which behaviour in a laboratory setting may be a reliable indicator of behaviour in a naturally occurring setting. From a cognitive perspective, it is useful for research on recognition processes, intuition, and similarity as a basis for inductive reasoning.

Item Type: Article
Official URL: http://www.wiley.com/bw/journal.asp?ref=0012-9682
Additional Information: © 2008 Wiley-Blackwell Publishing Ltd.
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HB Economic Theory
Sets: Research centres and groups > Managerial Economics and Strategy Group
Departments > Management
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 08 Jan 2010 15:02
URL: http://eprints.lse.ac.uk/26555/

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