Optimization incentives in dilemma games with strategic complementarity

Jan Potters and Sigrid Suetens

European Economic Review, 2020, vol. 127, issue C

Abstract: We examine whether optimization incentives — incentives to best-respond — have an effect on behavior in finitely repeated two-player dilemma games with strategic complements. We run an experiment in which we increase optimization incentives in two different ways compared to a baseline treatment with low strategic complementarity. In the first treatment, the increase in optimization incentives is created by an increase in payoffs on the best-response curve, while its slope remains unchanged. In the second treatment, the increase in optimization incentives takes the form of an increase in the slope of the best-response curve, while best-response payoffs remain unchanged. We find that the impact of optimization incentives is overshadowed by the effect of strategic complementarity. Although an increase in optimization incentives leads subjects to best-respond more frequently when the best-response curve is relatively flat, it leads to more cooperative behavior if the slope of the best-response function increases.

JEL-codes: C91 D01 D74 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Working Paper: Optimization incentives in dilemma games with strategic complementarity (2020)
Working Paper: Optimization incentives in dilemma games with strategic complementarity (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:127:y:2020:i:c:s0014292120300854

DOI: 10.1016/j.euroecorev.2020.103453

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