Equilibrium Selection in Network Coordination Games: An Experimental Study

Frey Vincenz, Rense Corten and Buskens Vincent
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Frey Vincenz: Utrecht University
Buskens Vincent: Utrecht University and Erasmus University Rotterdam

Review of Network Economics, 2012, vol. 11, issue 3, 28

Abstract: We experimentally study equilibrium selection in repeated coordination games played on networks. We test predictions from three competing theories. In line with payoff-dominance as a deductive selection principle, experienced subjects coordinate on the payoff-dominant (but risk-dominated) equilibrium. Groups of inexperienced subjects reach coordination through adaptive dynamics, with the likelihood of convergence to the payoff-dominant equilibrium not depending on the network structure. Subjects’ reactions to deviations from an established equilibrium challenge the proposition that decision noise favors coordination on the risk-dominant equilibrium.

Keywords: coordination; convention; risk dominance; Pareto-ranked equilibria; network effects; stochastic stability (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1515/1446-9022.1365

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