Invariance of Equilibrium to the Strategy Method II: Experimental Evidence

Daniel L. Chen and Martin Schonger
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Daniel L. Chen: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique
Martin Schonger: Swiss Fed Inst Technol, Ctr Law & Econ, Zurich,

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Abstract: The strategy method (SM) is, in practice, subject to a possibly severe economic-theoretical bias. Although many studies utilize SM to examine responses to rare or off-equilibrium behaviors unattainable through direct elicitation (DE), they ignore the fact that the strategic equivalence between SM and DE holds for the monetary payoff game but not the game participants actually play, which is in terms of utilities. We report three results. First, failing to account for estimation bias when decisions at one information set can influence utility at another may result in significant differences in decision-making. Second, the magnitude of this bias can be substantial, comparable to other measured treatment effects. Third, minor interventions targeting salience can amplify these differences similarly, causing treatment effects to differ significantly between SM and DE, even reversing in direction. These findings emphasize the need for reconsideration of the SM's reliability for economic research.

Keywords: Theory of experiments; Strategy method; Social preferences; Intentions; Deontological motivations (search for similar items in EconPapers)
Date: 2023-10-05
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Published in Journal of the Economic Science Association, 2023, ⟨DOI10.1007/s40881-023-00146-2⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04565612

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