Experimentally Testing Game Theory

Rachel Croson

Chapter Chapter 12 in Game Theory and Business Applications, 2014, pp 307-321 from Springer

Abstract: Abstract Controlled economic experiments have the potential to provide direct tests of the underlying assumptions of game theory, rather than the ambiguous tests typically provided by observational data. Thus, if a theory is not supported by experimental data, we can eliminate confounding explanations like mis-specification of the game to the situation, because the situation is constructed to exactly match the specification of the game. This allows us to identify other, deeper, potential causes of the theory’s failure to predict; further experiments can be designed to tease apart competing explanations for its failure, and to suggest refinements to the theory which can incorporate the existing evidence. As a result, we have a much richer body of game theory that can explain and predict behavior in a wide variety of business settings. This chapter describes two areas in which this dialectic between game theory and experiment has been especially productive – the common knowledge of rationality and the translation of outcomes to payoffs. These two experimental topics are particularly effective at testing fundamental game-theoretic assumptions, and generating new, richer theories of behavior. Key research results are highlighted and discussed.

Keywords: Game Theory; Common Knowledge; Experimental Participant; Ultimatum Game; Dictator Game (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:spr:isochp:978-1-4614-7095-3_12

Ordering information: This item can be ordered from
http://www.springer.com/9781461470953

DOI: 10.1007/978-1-4614-7095-3_12

Access Statistics for this chapter

More chapters in International Series in Operations Research & Management Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().