Correlated equilibria, good and bad: An experimental study

John Duffy, Nicholas Feltovich

Research output: Contribution to journalArticleResearchpeer-review

21 Citations (Scopus)

Abstract

We report results from an experiment that explores the empirical validity ofa??correlated equilibrium, an important generalization of Nash equilibrium. Specifically, we examine the conditions under which subjects playing the game of Chicken will condition their behavior on private third-party recommendations drawn from publicly announced distributions. We find that when recommendations are given, behavior differs from both a mixed-strategy Nash equilibrium and behavior without recommendations. In particular, subjects typically follow recommendations if and only if (1) those recommendations derive from a correlated equilibrium and (2) that correlated equilibrium is payoff-enhancing relative to the available Nash equilibria.
Original languageEnglish
Pages (from-to)701 - 721
Number of pages21
JournalInternational Economic Review
Volume51
Issue number3
DOIs
Publication statusPublished - 2010
Externally publishedYes

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