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Teaching Nash Equilibrium and Strategy Dominance: A Classroom Experiment on the Beauty ContestVirtudes Alba-FernandezUniversity of Jaén - Department of Statistics Pablo Branas-GarzaUniversity of Granada - Departamento de Teoria e Historia Económica Francisca Jimenez-JimenezUniversity of Jaén - Department of Economics; University of Valencia - Laboratory for Research in Experimental Economics (LINEEX) Javier Rodero CosanoUniversity of Valencia - Laboratory for Research in Experimental Economics (LINEEX) Abstract: The aim of this investigation is to display how the use of classroom experiments may be a good pedagogical tool to teach the Nash equilibrium (NE) concept. The basic game for our purposes is a repeated version of the Beauty Contest Game (BCG), a simple guessing game whose repetition lets students react to other players' choices and to converge iteratively to the equilibrium solution. We performed this experiment to undergraduated students without any previous knowledge about game theory. After four rounds, we observed in all groups a clear decreasing tendency in the average chosen number. So, our findings prove that, playing a repeated BCG, students learn quickly how to reach the NE solution.
Number of Pages in PDF File: 23 JEL Classification: A22, C99, D83 Case and Teaching Paper SeriesDate posted: October 10, 2003Suggested CitationContact Information
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