Risk dominance selects the leader. An experimental analysis
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- 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.accessioned 2020-05-25T09:27:02Z
- dc.date.available 2020-05-25T09:27:02Z
- dc.date.issued 1997-02-01
- dc.date.modified 2020-05-25T09:17:10Z
- 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.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=222
- dc.identifier.citation International Journal of Industrial Organization, 18, (2000), pp. 137-162
- dc.identifier.uri http://hdl.handle.net/10230/1056
- 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.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- 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.subject.keyword Behavioral and Experimental Economics
- dc.title Risk dominance selects the leader. An experimental analysis
- dc.type info:eu-repo/semantics/workingPaper