Can market selection reduce anomalous behaviour in games?
Lawrence Choo and
European Economic Review, 2022, vol. 141, issue C
We use an experiment to study whether market selection can reduce anomalous behaviour in games. In different treatments, we employ two alternative mechanisms, the random mechanism and the auction mechanism, to allocate the participation rights to the red hat puzzle game, a well-known logical reasoning problem. Compared to the random mechanism, the auction mechanism significantly reduces deviations from the equilibrium play in the red hat puzzle game. Our findings show that under carefully designed incentives, market competition can indeed reduce anomalous behaviour in games.
Keywords: Market competition; Market selection; Auctions; Bounded-rationality; Red hat puzzle (search for similar items in EconPapers)
JEL-codes: C70 C90 D44 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:141:y:2022:i:c:s0014292121002464
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