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Testing Game Theory in the Field: Swedish LUPI Lottery Games

Robert Östling (), Joseph Wang (), Eileen Chou () and Colin F. Camerer ()
Additional contact information
Eileen Chou: Management and Organization, Kellogg School of Management, Northwestern University, Postal: Evanston IL 60201, USA
Colin F. Camerer: Division for the Humanities and Social Sciences, California Institute of Technology, Postal: MC 228-77, Pasadena CA 91125, USA

No 671, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: Game theory is usually difficult to test precisely in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such test using field data from the Swedish lowest unique positive integer (LUPI) game. In the LUPI game, players pick positive integers and whoever chose the lowest unique number wins a fixed prize. Theoretical equilibrium predictions are derived assuming Poisson-distributed uncertainty about the number of players, and tested using both field and laboratory data. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Some of the deviations from equilibrium can be rationalized by a cognitive hierarchy model.

Keywords: Population uncertainty; Poisson game; guessing game; experimental methods; behavioral game theory; level-k; cognitive hierarchy (search for similar items in EconPapers)
JEL-codes: C72 C92 C93 L83 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2007-08-14, Revised 2010-12-15
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
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Published as Östling, Robert, Joseph Tao-yi Wang, Eileen Chou and Colin F. Camerer, 'Testing Game Theory in the Field: Swedish LUPI Lottery Games' in American Economic Journal: Microeconomics, 2011, pages 1-33.

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