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Coarse correlation and coordination in a game

Konstantinos Georgalos (), Indrajit Ray () and Sonali Sen Gupta ()

No 151235570, Working Papers from Lancaster University Management School, Economics Department

Abstract: In a coarse correlated equilibrium (Moulin and Vial 1978), each player finds it optimal to commit ex ante to the future outcome from a probabilistic correlation device instead of playing any strategy of their own. In this paper, we consider a specific two-person game with unique pure Nash and correlated equilibrium and test the concept of coarse correlated equilibrium with a device which is an equally weighted lottery over three symmetric outcomes in the game including the Nash equilibrium, with higher expected payoff than the Nash payoff (as in Moulin and Vial 1978). We also test an individual choice between a lottery over the same payoffs with equal probabilities and the sure payoff as in the Nash equilibrium of the game. Subjects choose the individual lottery, however, they do not commit to the device in the game and instead coordinate to play the Nash equilibrium. We explain this behaviour as an equilibrium in the game.

Keywords: Correlation; Coordination; Lottery (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 D63 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-gth, nep-hpe and nep-mic
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

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