An Experimental Study of Uncertainty in Coordination Games Autori: Miltiadis Makris & Christos Ioannou (University of Southampton)

Speaker:  Miltiadis Makris - University of Southampton
  Monday, May 26, 2014 at 12:30 PM Aula H, Palazzo di Economia
Abstract:
Global games and Poisson games have been proposed to address equilibrium indeterminacy in Coordination games. The former assume that agents face idiosyncratic uncertainty about economic fundamentals, whereas the latter, following Myerson (2000), model the number of actual players as a Poisson random variable. Given that their predictions differ, it is imperative to understand which type of uncertainty drives behavior, if any. Recent experimental literature finds that inexperienced subjects’ behavior is similar in Global and Common Knowledge Coordination games, thus casting doubts on whether idiosyncratic uncertainty about economic fundamentals is an important determinant of such behavior. We design an experiment to study the behavior of inexperienced subjects in single-shot, Global, Poisson and Common Knowledge Coordination games. Our findings corroborate the above experimental literature. They also suggest that uncertainty about the number of actual players does influence inexperienced subjects’ behavior. Importantly, such behavior under uncertainty about the number of actual players is consistent with the theoretical prediction.


Programme Director
Giam Pietro Cipriani

Publication date
March 10, 2014

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