On the empirical relevance of correlated equilibrium

Dan Friedman, Jean Paul Rabanal (), Olga A Rud () and Shuchen Zhao
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Olga A Rud: University of Stavanger, Postal: University of Stavanger, NO-4036 Stavanger, Norway

No 2021/2, UiS Working Papers in Economics and Finance from University of Stavanger

Abstract: Can an efficient correlated equilibrium emerge without any exogenous benevolent agent providing coordinating signals? Theoretical work in adaptive dynamics suggests a positive answer, which we test in a laboratory experiment. In the well-known Chicken game, we observe time average play that is close to the asymmetric pure Nash equilibrium in some treatments, and in other treatments we observe collusive play. In a game resembling rock-paper-scissors or matching pennies, we observe time average play close to a correlated equilibrium that is more efficient than the unique Nash equilibrium. Estimates and simulations of adaptive dynamics capture much of the observed regularities.

Keywords: Correlated equilibrium; Laboratory experiment; Adaptive dynamics (search for similar items in EconPapers)
JEL-codes: A00 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2021-09-29
New Economics Papers: this item is included in nep-cwa, nep-evo, nep-exp, nep-gth and nep-ore
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Journal Article: On the empirical relevance of correlated equilibrium (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:stavef:2021_002

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