Equilibrium selection in network coordination games: An experimental study
Frey,V. Corten,R. Buskens,V.
Frey,V.
Corten,R.
Buskens,V.
Abstract
We experimentally study equilibrium selection in repeated coordination games played on networks. We test predictions from three competing theories. In line with payoff-dominance as a deductive selection principle, experienced subjects coordinate on the payoff-dominant (but risk-dominated) equilibrium. Groups of inexperienced subjects reach coordination through adaptive dynamics, with the likelihood of convergence to the payoff-dominant equilibrium not depending on the network structure. Subjects’ reactions to deviations from an established equilibrium challenge the proposition that decision noise favors coordination on the risk-dominant equilibrium. Keywords: coordination; convention; risk dominance; Pareto-ranked equilibria; network effects; stochastic stability
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Date
2013
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Frey, V, Corten, R & Buskens, V 2013, 'Equilibrium selection in network coordination games : An experimental study', Review of Network Economics, vol. 11, no. 3, pp. 1-28. https://doi.org/10.1515/1446-9022.1365