Östling, Robert and Wang, Joseph Tao-yi and Chou, Eileen Y. and Camerer, Colin F. (2010) Testing Game Theory in the Field: Swedish LUPI Lottery Games. SSE/EFI Working Paper Series in Economics and Finance, 671. Economic Research Institute (EFI), Stockholm School of Economics , Pasadena, CA. https://resolver.caltech.edu/CaltechAUTHORS:20110215-080914315
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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 one 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.
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Additional Information: | This version: December 15, 2010. August 14, 2007, Revised December 15, 2010. The first two authors, Joseph Tao-yi Wang and Robert Östling, contributed equally to this paper. A previous version of this paper was included in Robert Östling's doctoral thesis. We are grateful for helpful comments from Vincent Crawford, Tore Ellingsen, Ido Erev, Magnus Johannesson, Botond Köszegi, David Laibson, Erik Lindqvist, Stefan Molin, Noah Myung, Rosemarie Nagel, Charles Noussair, Carsten Schmidt, Dylan Thurston, Dmitri Vinogradov, Mark Voorneveld, Jörgen Weibull, seminar participants, co-editor Robert Porter and several anonymous referees. RÖ acknowledges financial support from the Jan Wallander and Tom Hedelius Foundation. JW acknowledges support from the NSC of Taiwan (NSC 98-2410-H-002-069-MY2, NSC 99-2410-H-002-060-MY3). CFC acknowledges support from the NSF HSD program, HSFP, and the Betty and Gordon Moore Foundation. This paper is published as: Östling, Robert, Joseph Tao-yi Wang, Eileen Chou and Colin F. Camerer, (2011), 'Testing Game Theory in the Field: Swedish LUPI Lottery Games', American Economic Journal: Microeconomics, Vol. 3, August, No. 3, pages 1-33 | ||||||||||||||
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Subject Keywords: | Population uncertainty, Poisson game, guessing game, experimental methods, behavioral game theory, level-k, cognitive hierarchy | ||||||||||||||
Series Name: | SSE/EFI Working Paper Series in Economics and Finance | ||||||||||||||
Issue or Number: | 671 | ||||||||||||||
Classification Code: | JEL classification: C72, C92, L83, C93 | ||||||||||||||
Record Number: | CaltechAUTHORS:20110215-080914315 | ||||||||||||||
Persistent URL: | https://resolver.caltech.edu/CaltechAUTHORS:20110215-080914315 | ||||||||||||||
Usage Policy: | No commercial reproduction, distribution, display or performance rights in this work are provided. | ||||||||||||||
ID Code: | 22181 | ||||||||||||||
Collection: | CaltechAUTHORS | ||||||||||||||
Deposited By: | Tony Diaz | ||||||||||||||
Deposited On: | 10 Nov 2011 00:22 | ||||||||||||||
Last Modified: | 03 Aug 2020 21:44 |
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