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A behavioral study of “noise” in coordination games

Mäs, Michael and Nax, Heinrich H. (2016) A behavioral study of “noise” in coordination games. Journal of Economic Theory, 162. pp. 195-208. ISSN 0022-0531

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Identification Number: 10.1016/j.jet.2015.12.010

Abstract

‘Noise’ in this study, in the sense of evolutionary game theory, refers to deviations from prevailing behavioral rules. Analyzing data from a laboratory experiment on coordination in networks, we tested ‘what kind of noise’ is supported by behavioral evidence. This empirical analysis complements a growing theoretical literature on ‘how noise matters’ for equilibrium selection. We find that the vast majority of decisions (96%96%) constitute myopic best responses, but deviations continue to occur with probabilities that are sensitive to their costs, that is, less frequent when implying larger payoff losses relative to the myopic best response. In addition, deviation rates vary with patterns of realized payoffs that are related to trial-and-error behavior. While there is little evidence that deviations are clustered in time or space, there is evidence of individual heterogeneity.

Item Type: Article
Official URL: http://www.journals.elsevier.com/journal-of-econom...
Additional Information: © 2015 The Authors
Divisions: CPNSS
Subjects: B Philosophy. Psychology. Religion > BF Psychology
Q Science > QA Mathematics
JEL classification: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior
Date Deposited: 19 Feb 2016 12:14
Last Modified: 07 Nov 2024 18:06
Projects: Advanced Investigator Grant Momentum 324247
Funders: European Research Council
URI: http://eprints.lse.ac.uk/id/eprint/65422

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