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Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games
Author(s) -
Battalio Raymond,
Samuelson Larry,
Van Huyck John
Publication year - 2001
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.1111/1468-0262.00212
Subject(s) - dept , library science , citation , incentive , operations research , political science , sociology , computer science , economics , engineering , microeconomics , chemistry , stereochemistry
This paper reports an experiment comparing three stag hunt games that have the same best-response correspondence and the same expected payoff from the mixed equilibrium, but differ in the incentive to play a best response rather than an inferior response. In each game, risk dominance conflicts with payoff dominance and selects an inefficient pure strategy equilibrium. We find statistically and economically significant evidence that the differences in the incentive to optimize help explain observed behavior.