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Self-Selection Into Strategic Environments

Guillaume Hollard and Fabien Perez ()
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Fabien Perez: CREST, INSEE

No 2020-10, Working Papers from Center for Research in Economics and Statistics

Abstract: Self-selection is common in naturally-occurring situations, including those where players can choose to engage in strategic interactions, but is absent from most lab experiments. A better understanding of the effect of self-selection will therefore enhance the external validity of behavioral game theory. We here gauge the impact of self-selection on strategic interactions in one-shot games by adding an explicit self-selection stage to a lab experiment so as to address our two main questions: (1) What are the determinants of self-selection? and (2) What are the consequences of self-selection on the composition of the pool of subjects and, in turn, on the strategies played? We consider three potential drivers of self-selection: risk aversion, past strategies and a new (in this context) measure of confidence. One side-product of the present study is thus the first assessment of the relevance of confidence judgments in experimental games. We find that risk-aversion and confidence explain a large part of the individual heterogeneity in self-selection. We also find a substantial change in the strategies used under self-selection (as compared to no self-selection), with the main effect coming from the filtering out of ”poor” strategies (i.e. dominated strategies or strategies leading to low payoffs). As a result, we can predict that self-selected subjects in the field act morein accordance with Nash-equilibrium predictions, although there are still large deviations from equilibrium.

Keywords: Experiments; Self-selection; non-cooperative games; External Validity. (search for similar items in EconPapers)
JEL-codes: C72 C9 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-04-11
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
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