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Testing Game Theory in the Field: Swedish LUPI Lottery Games

Testing Game Theory in the Field: Swedish LUPI Lottery Games Abstract Game theory is usually difficult to test in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such test using both laboratory and field data from the Swedish lowest unique positive integer (LUPI) game. In this game, players pick positive integers and whoever chooses the lowest unique number wins. Equilibrium predictions are derived assuming Poisson distributed population uncertainty. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Some deviations can be rationalized by a cognitive hierarchy model. ( JEL C70, C93, D44, H27) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Testing Game Theory in the Field: Swedish LUPI Lottery Games

Testing Game Theory in the Field: Swedish LUPI Lottery Games

American Economic Journal: Microeconomics , Volume 3 (3) – Aug 1, 2011

Abstract

Abstract Game theory is usually difficult to test in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such test using both laboratory and field data from the Swedish lowest unique positive integer (LUPI) game. In this game, players pick positive integers and whoever chooses the lowest unique number wins. Equilibrium predictions are derived assuming Poisson distributed population uncertainty. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Some deviations can be rationalized by a cognitive hierarchy model. ( JEL C70, C93, D44, H27)

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Publisher
American Economic Association
Copyright
Copyright © 2011 by the American Economic Association
Subject
Articles
ISSN
1945-7685
eISSN
1945-7685
DOI
10.1257/mic.3.3.1
Publisher site
See Article on Publisher Site

Abstract

Abstract Game theory is usually difficult to test in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such test using both laboratory and field data from the Swedish lowest unique positive integer (LUPI) game. In this game, players pick positive integers and whoever chooses the lowest unique number wins. Equilibrium predictions are derived assuming Poisson distributed population uncertainty. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Some deviations can be rationalized by a cognitive hierarchy model. ( JEL C70, C93, D44, H27)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Aug 1, 2011

References