Risk dominance selects the leader. An experimental analysis

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International Journal of Industrial Organization, 18, (2000), pp. 137-162
To cite or link this document: http://hdl.handle.net/10230/1056
dc.contributor.author Cabrales, Antonio
dc.contributor.author Garcia Fontes, Walter
dc.contributor.author Motta, Massimo
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
dc.date.issued 1997-02-01
dc.identifier.citation International Journal of Industrial Organization, 18, (2000), pp. 137-162
dc.identifier.uri http://hdl.handle.net/10230/1056
dc.description.abstract Coordination games arise very often in studies of industrial organization and international trade. This type of games has multiple strict equilibria, and therefore the identification of testable predictions is very difficult. We study a vertical product differentiation model with two asymmetric players choosing first qualities and then prices. This game has two equilibria for some parameter values. However, we apply the risk dominance criterion suggested by Harsanyi and Selten and show that it always selects the equilibrium where the leader is the firm having some initial advantage. We then perform an experimental analysis to test whether the risk dominance prediction is supported by the behaviour of laboratory agents. We show that the probability that the risk dominance prediction is right depends crucially on the degree of asymmetry of the game. The stronger the asymmetries the higher the predictive power of the risk dominance criterion.
dc.language.iso eng
dc.relation.ispartofseries Economics and Business Working Papers Series; 222
dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.title Risk dominance selects the leader. An experimental analysis
dc.type info:eu-repo/semantics/workingPaper
dc.date.modified 2016-06-04T02:50:19Z
dc.subject.keyword Behavioral and Experimental Economics
dc.subject.keyword risk dominance
dc.subject.keyword equilibrium selection
dc.subject.keyword leadership games
dc.subject.keyword experimental economics
dc.subject.keyword leex
dc.rights.accessRights info:eu-repo/semantics/openAccess

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