Bounded Rationality and Strategic Uncertainty in a Simple Dominance Solvable Game

14 Pages Posted: 27 May 2013

See all articles by Nobuyuki Hanaki

Nobuyuki Hanaki

Osaka University - Institute of Social and Economic Research

Nicolas Jacquemet

Paris School of Economics (PSE); Université Paris I Panthéon-Sorbonne

Stephane Luchini

National Center for Scientific Research (CNRS) - Research Group in Quantitative Saving (GREQAM), EHESS

Adam Zylbersztejn

Paris School of Economics (PSE); Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES)

Date Written: February 2013

Abstract

How much of the failures to achieve Pareto efficient outcome observed in a simple 2 x 2 dominance solvable game can be attributed to strategic uncertainty and how much is actually due to individual bounded rationality? We address this question by conducting a set of experiments involving two main treatments: one in which two human subjects interact, and another in which one human subject interacts with a computer program whose behavior is known. By making the behavior of the computer opponent perfectly predictable, the latter treatment eliminates strategic uncertainty. Our results suggest that observed coordination failures can be attributed equally to individual bounded rationality and strategic uncertainty.

Keywords: Strategic Uncertainty, Robot, Bounded Rationality, Experiment

JEL Classification: C92, D83

Suggested Citation

Hanaki, Nobuyuki and Jacquemet, Nicolas and Luchini, Stephane and Zylbersztejn, Adam, Bounded Rationality and Strategic Uncertainty in a Simple Dominance Solvable Game (February 2013). Available at SSRN: https://ssrn.com/abstract=2261116 or http://dx.doi.org/10.2139/ssrn.2261116

Nobuyuki Hanaki

Osaka University - Institute of Social and Economic Research ( email )

6-1, Mihogaoka
Suita, Osaka 567-0047
Japan

Nicolas Jacquemet (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, 75005
France

HOME PAGE: http://www.nicolasjacquemet.com/

Stephane Luchini

National Center for Scientific Research (CNRS) - Research Group in Quantitative Saving (GREQAM), EHESS ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

Adam Zylbersztejn

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Université Paris I Panthéon-Sorbonne - Centre d'Economie de la Sorbonne (CES) ( email )

106-112 Boulevard de l'hopital
106-112 Boulevard de l'Hôpital
Paris Cedex 13, 75647
France

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