When are Nash equilibria self-enforcing? An experimental analysis

Clark, Kenneth McKenzie; Kay, Stephen; Sefton, Martín

doi:10.1007/s001820000054

Cited by 112 publications

(51 citation statements)

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“…This suggests it may not be credible and preplay communication with nonbinding orders may not enhance coordination on the Pareto dominant equilibrium. This is in line with Clark et al (2001), who consider a game where the Aumann critique applies. They find that cooperation is played 42% of the time but announced 81% of the time.…”

Section: Cheap Talk and Cooperationsupporting

confidence: 84%

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Equilibrium Discovery and Preopening Mechanisms in an Experimental Market

2014

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Equilibrium discovery and preopening mechanisms in an experimental market. AbstractWe experimentally analyze equilibrium discovery in i) a pure call auction, ii) a call auction preceded by a nonbinding preopening period, and iii) a call auction preceded by a binding preopening period. We examine whether a preopening period can facilitate coordination on the Pareto dominant equilibrium. During the nonbinding preopening period, traders tend to place manipulative orders. After observing such orders, participants learn to distrust cheap talk and coordinate less on Pareto dominant outcomes. In contrast, we find that, when preopening orders are binding, they improve the ability to coordinate on high gains from trade.

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Section: Cheap Talk and Cooperationsupporting

confidence: 84%

“…This differs from the case studied by Cooper et al (1992). Clark et al (2001) also study preplay communication in a setting where announces are not self enforcing. They find that cooperation is announced 81% of the time, but played only 42% of the time.…”

Section: The Trading Gamementioning

confidence: 91%

Equilibrium Discovery and Preopening Mechanisms in an Experimental Market

2014

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“…However, their payoffs do not permit a direct test of the Aumann conjecture, as there is no strict preference over the other player's action when he or she intends to play A. Clark et al (1997) choices is affected by communication p = 0 0027 ." Nonetheless, the efficient outcome is not observed in most cases and they conclude on p. 14 that "these results suggest that communication is not sufficient for attaining efficiency in simple coordination games.…”

Section: Coordination Communication and Dominancementioning

confidence: 99%

Self-Serving Cheap Talk: A Test Of Aumann's Conjecture

Charness

2000

Games and Economic Behavior

227

166

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The effectiveness of pre-play communication in achieving efficient outcomes has long been a subject of controversy. Aumann conjectures that, in a variant of the Stag Hunt game, "an agreement to play [the efficient outcome] conveys no information about what the players will do" and thus should not affect behavior. Farrell and Rabin suspect that cheap talk will achieve efficiency. Results show impressive coordination when the sender first chooses a signal and then an action. Without communication, efforts to achieve efficiency are largely unsuccessful. As Farrell suggests, reversing the order of the action and signal appears to change players' behavior. Journal of Economic Literature Classification Numbers: A13, C72, C91, D82, D84.

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“…Overall, it is interesting to note, and very likely a consequence of the predominant matching protocol, that many authors working in this area focused on the structure of the payoff matrix (e.g., Battalio, Samuelson andVan Huyck [BSVH], 2001, andClark, Kay andSefton [CKS], 2001) 13 rather than implementation details that had shown to be of importance in order statistic games. Schmidt, Shupp, Walker and Ostrom (2003), in an article closely related to BSVH (2001), systematically vary measures of payoff-dominance and risk-dominance (the definition of which used here is nonstandard) and find -both for random matching and fixed matching protocols --that players react to changes in risk-dominance but not payoff-dominance.…”

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confidence: 99%

When and Why? A Critical Survey on Coordination Failure in the Laboratory

Devetag

Ortmann²

2006

SSRN Journal

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Coordination games with Pareto-ranked equilibria have attracted major theoretical attention over the past two decades. Two early path-breaking sets of experimental studies were widely interpreted as suggesting that coordination failure is a common phenomenon in the laboratory. We identify the major determinants that seem to affect the incidence, and/or emergence, of coordination failure in the lab and review critically the existing experimental studies on coordination games with Pareto-ranked equilibria since that early evidence emerged. We conclude that coordination failure is likely to be the exception rather than the rule, both in the lab and outside of it.

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When are Nash equilibria self-enforcing? An experimental analysis

Cited by 112 publications

References 0 publications

Equilibrium Discovery and Preopening Mechanisms in an Experimental Market

Equilibrium Discovery and Preopening Mechanisms in an Experimental Market

Self-Serving Cheap Talk: A Test Of Aumann's Conjecture

When and Why? A Critical Survey on Coordination Failure in the Laboratory

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