When Are Nash Equilibria Self-Enforcing? An Experimental Analysis

Ken Clark, Stephen Kay and Martin Sefton
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Stephen Kay: University of Manchester

Experimental from University Library of Munich, Germany

Abstract: We investigate the effect of non-binding pre-play communication in experiments with simple two-player coordination games. We reproduce the results of other studies in which play converges to a Pareto-dominated equilibrium in the absence of communication, and communication moves outcomes in the direction of the Pareto-dominant equilibrium. However, we provide new results which show that the effectiveness of communication is sensitive to the structure of payoffs. Our results support an argument put forward by Aumann: agreements to play a Nash equilibrium are fragile when players have a strict preference over their opponent's strategy choice. We also find that informative communication does not necessarily lead to the Pareto-dominant equilibrium.

Keywords: Sefton (search for similar items in EconPapers)
JEL-codes: C9 (search for similar items in EconPapers)
Pages: 33 pages
Date: 1997-07-08
Note: Type of Document - WordPerfect; pages: 33 ; figures: included. We never published this piece and now we would like to reduce our mailing and xerox cost by posting it.
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Related works:
Journal Article: When are Nash equilibria self-enforcing? An experimental analysis (2001)
Working Paper: When Are Nash Equilibria Self Enforcing ? An Experimental Analysis (1997)
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