Experimental Investigation of a Cyclic Duopoly Game

Sebastian J. Goerg () and Reinhard Selten

Bonn Econ Discussion Papers from University of Bonn, Germany

Abstract: The notion of a cyclic game has been introduced by Selten and Wooders (2001). They illustrate the concept by the analysis of a cyclic duopoly game. The experiments reported concern this game. The game was played by eleven matching groups of six players each. The observed choice fre- quencies were compared with the predictions of Nash equilibrium, impulse balance equilibrium (Selten, Abbink and Cox (2005), Selten and Chmura (2007)) and two-sample equilbrium (Osborne and Rubinstein(1998)). Pair- wise comparisons by the Wilcoxon Signed-rank test show that impulse balance equilibrium as well as two-sample equilibrium have a significantly better predictive success than Nash equilibrium. The difference between impulse balance equilibrium and two-sample equilibrium is not significant.In each matching group three players acted only in uneven periods and the other three only in even periods. This game has two pure strategy equi- libria in which both types of players behave differently. The data exhibit a weak but significant tendency in the direction of coordination at a pure strategy equilibrium.

Keywords: cyclic game duopoly experiment; impulse balance equilibrium; two-sample equilibrium (search for similar items in EconPapers)
JEL-codes: C73 D43 C90 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-gth
Date: 2007-06

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