SSE/EFI Working Paper Series in Economics and Finance
No 671:
Testing Game Theory in the Field: Swedish LUPI Lottery Games
Robert Östling ()
, Joseph Tao-yi Wang ()
, Eileen Chou ()
and Colin F. Camerer ()
Abstract: Game theory is usually difficult to test precisely in the
field because predictions typically depend sensitively on features that are
not controlled or observed. We conduct on such test using field data from
the Swedish lowest unique positive integer (LUPI) game. In the LUPI game,
players pick positive integers and whoever chose the lowest unique number
wins a fixed prize. Theoretical equilibrium predictions are derived
assuming Poisson-distributed uncertainty about the number of players, and
tested using both field and laboratory data. The field and lab data show
similar patterns. Despite various deviations from equilibrium, there is a
surprising degree of convergence toward equilibrium. Some of the deviations
from equilibrium can be rationalized by a cognitive hierarchy model.
Keywords: Population uncertainty; Poisson game; guessing game; experimental methods; behavioral game theory; level-k; cognitive hierarchy; (follow links to similar papers)
JEL-Codes: C72; C92; C93; L83; (follow links to similar papers)
86 pages, August 14, 2007, Revised August 2, 2010
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