How Sensitive is Strategy Selection in Coordination Games?

Siegfried K. Berninghaus (), Lora R. Todorova () and Bodo Vogt ()
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Siegfried K. Berninghaus: Institute for Economic Theory and Statistics, Karlsruhe Institute of Technology
Lora R. Todorova: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg
Bodo Vogt: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg

No 120020, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

Abstract: This paper presents the results of an experiment designed to study the effect produced on strategy choices when a subject reports risk preferences on a risk scale before engaging in a 2x2 coordination game. The main finding is that the act of stating one's own risk preferences significantly alters strategic behavior. In particular, subjects tend to choose the risk dominant strategy more often when they have previously stated their attitudes to risk. Within a best-response correspondence framework, this result can be explained by a change in either risk preferences or beliefs. We find that self-reporting risk preferences does not induce a change in subjects' beliefs. We argue that the behavioral arguments of strategy selection, such as focal points, framing and uncertain preferences can explain our results.

Keywords: coordination game; questionnaire; risk scale; risk preferences; beliefs; focal points; framing; uncertain preferences (search for similar items in EconPapers)
JEL-codes: C72 C91 D81 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-09
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-evo, nep-exp, nep-gth, nep-hpe, nep-net and nep-upt
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Citations: View citations in EconPapers (1)

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