Do Nonstrategic Considerations Matter for Behavior in Games? An Experimental Study Informed by Direct-sum Decompositions of Game

García-Galocha, Aleix, Iñarra, Elena and Nagore Iriberri

No 17578, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use the direct-sum decomposition proposed by Candogan et al. (2011) to decompose any normal-form finite game into the strategic and the nonstrategic components. Nash equilibrium is invariant to changes in the nonstrategic component. Mutual-Max- Sum, a new solution concept defined in this paper, depends only on the nonstrategic component, identifies the most relevant strategy profile in this component and it is invariant to changes in the strategic component. We design 3x3 games to empirically test, whether and when, manipulations in the nonstrategic component affect individual behavior and whether Mutual-Max-Sum is behaviorally relevant. We find that manipulations of the nonstrategic component affects individual behavior and that Mutual-Max-Sum is able to attract individual behavior only when it is Pareto efficient and in particular, payoff dominant. We conclude that Candogan et al. (2011)’s decomposition is informative to learn about individual behavior in games.

Keywords: Nash equilibrium; Pareto efficiency (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 (search for similar items in EconPapers)
Date: 2022-10
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