Rights statement: The final publication is available at Springer via https://doi.org/10.1007/s10683-020-09647-x
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Available under license: CC BY-NC: Creative Commons Attribution-NonCommercial 4.0 International License
Final published version
Licence: CC BY: Creative Commons Attribution 4.0 International License
Research output: Contribution to Journal/Magazine › Journal article › peer-review
| <mark>Journal publication date</mark> | 1/12/2020 |
|---|---|
| <mark>Journal</mark> | Experimental Economics |
| Volume | 23 |
| Number of pages | 27 |
| Pages (from-to) | 1178–1204 |
| Publication Status | Published |
| Early online date | 20/02/20 |
| <mark>Original language</mark> | English |
We run a laboratory experiment to test the concept of coarse correlated equilibrium (Moulin and Vial in Int J Game Theory 7:201-221, 1978), with a two-person game with unique pure Nash equilibrium which is also the solution of iterative elimination of strictly dominated strategies. The subjects are asked to commit to a device that randomly picks one of three symmetric outcomes (including the Nash point) with higher ex-ante expected payoff than the Nash equilibrium payoff. We find that the subjects do not accept this lottery (which is a coarse correlated equilibrium); instead, they choose to play the game and coordinate on the Nash equilibrium. However, given an individual choice between a lottery with equal probabilities of the same outcomes and the sure payoff as in the Nash point, the lottery is chosen by the subjects. This result is robust against a few variations. We explain our result as selecting risk-dominance over payoff dominance in equilibrium.