Does mutual knowledge of preferences lead to more Nash equilibrium play? Experimental evidence

Nash equilibrium often does not seem to accurately predict behavior. In experimental game theory, it is usually assumed that the monetary payoffs in the game represent subjects’ utilities. However, subjects may actually play a very different game. In this case, mutual knowledge of preferences may no...

Full description

Saved in:
Bibliographic Details
Published in:European economic review 2021-06, Vol.135, p.103735, Article 103735
Main Authors: Brunner, Christoph, Kauffeldt, T. Florian, Rau, Hannes
Format: Article
Language:English
Subjects:
Behavioral game theory
Epistemic game theory
Game theory
Incomplete information games
Nash equilibrium
Strategic ambiguity
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Nash equilibrium often does not seem to accurately predict behavior. In experimental game theory, it is usually assumed that the monetary payoffs in the game represent subjects’ utilities. However, subjects may actually play a very different game. In this case, mutual knowledge of preferences may not be satisfied. In our experiment, we first elicit subjects’ preferences over the monetary payoffs for all players. This allows us to identify equilibria in the games that subjects actually are playing (the preference games). We then examine whether revealing other subjects’ preferences leads to more equilibrium play and find that this information indeed has a significant effect. Furthermore, it turns out that subjects are more likely to play maxmin and maxmax strategies than Nash equilibrium strategies.
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2021.103735