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Sequential equilibrium in monotone games: A theory-based analysis of experimental data

Choi, S; Gale, D; Kariv, S; (2008) Sequential equilibrium in monotone games: A theory-based analysis of experimental data. ACADEMIC PRESS INC ELSEVIER SCIENCE

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Abstract

A monotone game is an extensive-form game with complete information, simultaneous moves and an irreversibility structure on strategies. It captures a variety of situations in which players make partial commitments and allows us to characterize conditions under which equilibria result in socially desirable outcomes. However, since the game has many equilibrium outcomes. the theory lacks predictive power. To produce strong er predictions, one can restrict attention to the set of sequential equilibria, or Markov equilibria, or symmetric equilibria, or pure-strategy equilibria. This paper explores the relationship between equilibrium behavior in a class of monotone games, namely voluntary contribution games, and the behavior of human subjects in an experimental setting. Several key features of the symmetric Markov perfect equilibrium (SMPE) are consistent with the data. To judge how well the SNIPE fits the data, we estimate a model of Quantal Response Equilibrium (QRE) [R. McKelvey. T. Palfrey, Quantal response equilibria for normal form games. Games Econ. Behav. 10 (1995) 6-38; R. McKelvey, T. Palfrey, Quantal response equilibria for extensive form games, Exp. Econ. 1 (1998) 9-41] and find that the decision rules of the QRE model are qualitatively very similar to the empirical choice probabilities. (C) 2008 Elsevier Inc. All rights reserved.

Type: Other
Title: Sequential equilibrium in monotone games: A theory-based analysis of experimental data
Location: Chicago, IL
Dates: 2007-01-05 - 2007-01-07
DOI: 10.1016/j.jet.2008.03.001
Keywords: Experiment, Monotone games, Refinements, Pure strategy, Mixed strategy, Markov perfect, Quantal response equilibrium, DYNAMIC VOLUNTARY CONTRIBUTION, COORDINATION GAMES
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/67198
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