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- Title
GAME THEORY FOR PLAYING GAMES: SOPHISTICATION IN A NEGATIVE-EXTERNALITY EXPERIMENT.
- Authors
SPRAGGON, JOHN M.; OXOBY, ROBERT J.
- Abstract
We explore the extent to which the lack of Nash payoff maximization in experimental games is attributable to the “sophistication” of participants (i.e., their understanding of strategic decision making and profit-maximizing decisions). To this end, we compare the behaviors of sophisticated participants (i.e., those who have been exposed to the concepts of game theory) against those of a more standard subject pool in a moral hazard environment. Results suggest that sophisticated subjects are significantly more likely to adopt strategies predicted by standard theory and arrive at a Nash equilibrium. ( JEL C72, C91, C92, D63, D64)
- Subjects
GAME theory; RISK management in business; DECISION making; NASH equilibrium; MATHEMATICAL optimization; MORAL hazard; DECISION theory
- Publication
Economic Inquiry, 2009, Vol 47, Issue 3, p467
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/j.1465-7295.2008.00146.x