Experimental Games on Networks: Underpinnings of Behavior and Equilibrium Selection

Gary Charness, Francesco Feri, Miguel Meléndez-Jiménez () and Matthias Sutter

No 8104, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we describe a series of laboratory experiments that implement specific examples of a more general network structure and we examine equilibrium selection. Specifically, actions are either strategic substitutes or strategic complements, and participants have either complete or incomplete information about the structure of a random network. Since economic environments typically have a considerable degree of complementarity or substitutability, this framework applies to a wide variety of settings. The degree of equilibrium play is striking, in particular with incomplete information. Behavior closely resembles the theoretical equilibrium whenever this is unique; when there are multiple equilibria, general features of networks, such as connectivity, clustering, and the degree of the players, help to predict informed behavior in the lab. People appear to be strongly attracted to maximizing aggregate payoffs (social efficiency), but there are forces that moderate this attraction: 1) people seem content with (in the aggregate) capturing only the lion's share of the efficient profits in exchange for reduced exposure to loss, and 2) uncertainty about the network structure makes it considerably more difficult to coordinate on a demanding, but efficient, equilibrium that is typically implemented with complete information.

Keywords: incomplete information; strategic complements; clustering; connectivity; random networks; strategic substitutes; experiment (search for similar items in EconPapers)
JEL-codes: C71 C91 D03 D85 (search for similar items in EconPapers)
Pages: 89 pages
Date: 2014-04
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth, nep-hpe, nep-ict, nep-net and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (63)

Published - slightly revised version published in: Econometrica, 2014, 82(5), 1615-1670

Downloads: (external link)
https://docs.iza.org/dp8104.pdf (application/pdf)

Related works:
Journal Article: Experimental Games on Networks: Underpinnings of Behavior and Equilibrium Selection (2014)
Journal Article: Experimental Games on Networks: Underpinnings of Behavior and Equilibrium Selection (2014)
Working Paper: Experimental games on networks: Underpinnings of behavior and equilibrium selection (2014)
Working Paper: Experimental Games on Networks: Underpinnings of Behavior andEquilibrium Selection (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp8104

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().