Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2020:17: Discontinuous and Continuous Stochastic Choice and Coordination in the Lab

Maxim Goryunov () and Alexandros Rigos ()
Additional contact information
Maxim Goryunov: Nazarbayev University
Alexandros Rigos: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: We experimentally test theoretical predictions on equilibrium selection in a two-player coordination (investment) game. Through a minimal visual variation, our design prompts participants to play strategies whereby investing probability is either continuous or discontinuous in the payoff-relevant state. When participants use continuous strategies, average behavior is consistent with play in the risk-dominant equilibrium, the unique theoretical prediction. When they use discontinuous strategies, average behavior is closer to the payoff-dominant equilibrium strategy. In this case, the theory predicts multiple equilibria, for which we find no support. Additionally, we extend the theory to heterogeneous populations: the set of equilibria monotonically decreases in the proportion of players who use continuous strategies.

Keywords: Coordination; Global games; Information acquisition; Continuous stochastic choice; Laboratory experiment; Perception

JEL-codes: C72; C92; D83

Language: English

44 pages, First version: August 31, 2020. Revised: June 15, 2022.

Full text files

wp20_17.pdf PDF-file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Prakriti Thami ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-03-09 16:03:10.