When are Nash equilibria self-enforcing? An experimental analysis

Abstract.

We investigate the effect of non-binding pre-play communication in experiments with simple two-player coordination games. We reproduce the results of other studies in which play converges to a Pareto-dominated equilibrium in the absence of communication, and communication moves outcomes in the direction of the Pareto-dominant equilibrium. However, we provide new results which show that the effectiveness of communication is sensitive to the structure of payoffs. Our results support an argument put forward by Aumann: agreements to play a Nash equilibrium are fragile when players have a strict preference over their opponent's strategy choice. We also find that informative communication does not necessarily lead to the Pareto-dominant equilibrium.

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Received: January 1997/Revised version: February 1997

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Clark, K., Kay, S. & Sefton, M. When are Nash equilibria self-enforcing? An experimental analysis. Game Theory 29, 495–515 (2001). https://doi.org/10.1007/s001820000054

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Keywords

  • Nash Equilibrium
  • Experimental Analysis
  • Strategy Choice
  • Coordination Game
  • Informative Communication