When less information is good enough: experiments with global stag hunt games
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There is mixed evidence on whether subjects coordinate on the efficient equilibrium in experimental stag hunt games under complete information. A design that generates an anomalously high level of coordination, Rankin et al. (Games Econo Behav 32(2):315–337, 2000), varies payoffs each period in repeated play rather than holding them constant. These payoff “perturbations” are eerily similar to those used to motivate the theory of global games, except the theory operates under incomplete information. Interestingly, that equilibrium selection concept is known to coincide with risk dominance, rather than payoff dominance. Thus, in theory, a small change in experimental design should produce a different equilibrium outcome. We examine this prediction in two treatments. In one, we use public signals to match Rankin et al. (2000)’s design; in the other, we use private signals to match the canonical example of global games theory. We find little difference between treatments, in both cases, subject play approaches payoff dominance. Our literature review reveals this result may have more to do with the idiosyncrasies of our complete information framework than the superiority of payoff dominance as an equilibrium selection principle.
KeywordsStag hunt Global games Efficiency Equilibrium selection Threshold strategies Risk dominance Payoff dominance Experiments
JEL ClassificationC72 C92 C73 D82
Financial support was provided by the Texas A&M Humanities and Social Science Enhancement of Research Capacity Program. The research was conducted under TAMU IRB approval IRB2012-0664. We thank Ravi Hanumara for his help on z-Tree programming and the Economic Research Laboratory group at Texas A&M for testing the program. We also thank Yan Chen, Catherine C. Eckel, Daniel Fragiadakis, Nikos Nikiforakis, two anonymous referees, and the seminar participants at NYU-Abu Dhabi, American University of Sharjah, Thammasat University, Texas A&M University, the workshop in honor of John Van Huyck, the 2015 North American Economic Science Association meetings, the 2014 Texas Experimental Association Symposium, the 2013 North American Economic Science Association meetings, and the 2013 Southern Economic Association Conference for valuable comments and discussion.
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