An Explanation of Anomalous Behavior in Binary-Choice Games: Entry, Voting, Public Goods, and the Volunteers' Dilemma

Jacob Goeree and Charles Holt

Virginia Economics Online Papers from University of Virginia, Department of Economics

Abstract: This paper characterizes behavior with "noisy" decision making for a general class of N-person, binary-choice games. Applications include: participation games, voting, market entry, binary step-level public goods games, the volunteer's dilemma, the El Farol problem, etc. A simple graphical device is used to derive comparative statics and other theoretical properties of a "quantal response" equilibrium, and the resulting predictions are compared with Nash equilibria that arise in the limiting case of no noise. Many anomalous data patterns in laboratory experiments based on these games can be explained in this manner.

Keywords: participation games; entry; voting; step-level public goods games; volunteers' dilemma; quantal response equilibrium; El Farol problem; bounded rationality. (search for similar items in EconPapers)
JEL-codes: C72 C92 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2000-01
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Citations: View citations in EconPapers (16)

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