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The Minority Game Unpacked: Coordination and Competition in a Team-based Experiment

Giovanna Devetag, Francesca Pancotto and Thomas Brenner ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: In minority games, players in a group must decide at each round which of two available options to choose, knowing that only subjects who picked the minority option obtain a positive reward. Previous experiments on the minority and similar congestion games have shown that players interacting repeatedly are remarkably able to coordinate efficiently, despite not conforming to Nash equilibrium behavior. We conduct an experiment on a Minority-of-three game in which each player is a team composed by three subjects. Each team can freely discuss its strategies in the game and decisions must be adopted through a majority rule. Team discussions are recorded and their content analyzed to detect evidence of strategy co-evolution between teams playing together. Our main results of group discussion analysis show no evidence supporting the mixed strategy Nash equilibrium solution, suggesting that individuals' non conformity to Nash at the choice data level does not derive from imperfect ability to randomize, but by players intentionally not pursuing this type of strategy. In addition, teams that are more successful tend to be more self-centered over time, paying more attention to their own past successful strategies than to the behavior of other teams. Moreover, we find evidence of mutual adaptation between players' strategies, as teams that are more sophisticated (i.e., they pay more attention to other teams' moves) tend, on average, to induce other teams to be less sophisticated and more self-centered. Our results contribute to the understanding of coordination dynamics resting on heterogeneity and co-evolution of decision rules rather than on conformity to equilibrium behavior, both at the aggregate and at the individual level.

JEL-codes: C72 C91 C92 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: The Minority Game Unpacked: Coordination and Competition in a Team-based Experiment (2011) Downloads
Working Paper: The Minority Game Unpacked: Coordination and Competition in a Team-based Experiment (2011) Downloads
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