A behavioral study of “noise” in coordination games

Michael Mäs and Heinrich H. Nax

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: behavioral game theory; discrete choice; evolution; learning; logit response; stochastic stability; trial-and-error (search for similar items in EconPapers)
JEL-codes: C73 C91 C92 (search for similar items in EconPapers)
Date: 2016-03-01
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-evo and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Published in Journal of Economic Theory, 1, March, 2016, 162, pp. 195-208. ISSN: 0022-0531

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:65422

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