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Equilibrium selection in similar repeated games: experimental evidence on the role of precedents

Published online by Cambridge University Press:  14 March 2025

John Duffy Open the ORCID record for John Duffy [Opens in a new window]  and
Dietmar Fehr
John Duffy*
Affiliation:
University of California, Irvine, CA, USA
Dietmar Fehr*
Affiliation:
WZB, Berlin, Germany
*
[email protected]
[email protected]
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Abstract

We report on an experiment examining behavior and equilibrium selection in two similar, infinitely repeated games, Stag Hunt and Prisoner’s Dilemma under anonymous random matching. We are interested in the role that historical precedents may play for equilibrium selection between these two repeated games. We find that a precedent for efficient play in the repeated Stag Hunt game does not carry over to the repeated Prisoner’s Dilemma game despite the possibility that efficient play can be sustained as an equilibrium of the indefinitely repeated game. Similarly, a precedent for inefficient play in the repeated Prisoner’s Dilemma game does not extend to the repeated Stag Hunt game. We conclude that equilibrium selection between similar repeated games may have less to do with historical precedents and might instead depend more on strategic considerations associated with the different payoffs of these similar repeated games.

Keywords

Repeated gamesCoordination problemsEquilibrium selectionSimilarityPrecedentBeliefsExperimental economics

JEL classification

C92: Laboratory, Group Behavior C73: Stochastic and Dynamic Games • Evolutionary Games • Repeated Games D83: Search • Learning • Information and Knowledge • Communication • Belief • Unawareness C72: Noncooperative Games
Type
Original Paper
Information
Experimental Economics , Volume 21 , Issue 3: Special Issue in Honor of John Van Huyck , September 2018 , pp. 573 - 600
Copyright
Copyright © 2017 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-017-9531-6) contains supplementary material, which is available to authorized users.

For helpful comments and suggestions we thank an anonymous referee and participants at the Workshop in Memory of John Van Huyck held at SMU in October 2015. Dietmar Fehr gratefully acknowledges financial support from the Deutsche Forschungsgemeinschaft (DFG) through CRC 1029.

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