Testing Game Theory in the Field: Swedish LUPI Lottery Games

SSE/EFI Working Paper Series in Economics and Finance No. 671

86 Pages Posted: 23 Aug 2007 Last revised: 5 Aug 2010

See all articles by Robert Ostling

Robert Ostling

Stockholm School of Economics - Department of Economics

Joseph Tao-yi Wang

National Taiwan University - Department of Economics

Eileen Y. Chou

Northwestern University - Kellogg School of Management

Colin Camerer

California Institute of Technology - Division of the Humanities and Social Sciences

Date Written: August 2, 2010

Abstract

Game theory is usually difficult to test precisely in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such test using field data from the Swedish lowest unique positive integer (LUPI) game. In the LUPI game, players pick positive integers and whoever chose the lowest unique number wins a fixed prize. Theoretical equilibrium predictions are derived assuming Poisson-distributed uncertainty about the number of players, and tested using both field and laboratory data. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Some of the deviations from equilibrium can be rationalized by a cognitive hierarchy model.

Keywords: Population uncertainty, Poisson game, guessing game, experimental methods, behavioral game theory, level-k, cognitive hierarchy

JEL Classification: C72, C92, L83, C93

Suggested Citation

Ostling, Robert and Wang, Joseph Tao-yi and Chou, Eileen Y. and Camerer, Colin F., Testing Game Theory in the Field: Swedish LUPI Lottery Games (August 2, 2010). SSE/EFI Working Paper Series in Economics and Finance No. 671. Available at SSRN: https://ssrn.com/abstract=1007181 or http://dx.doi.org/10.2139/ssrn.1007181

Robert Ostling

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden

Joseph Tao-yi Wang (Contact Author)

National Taiwan University - Department of Economics ( email )

1 Roosevelt Road, Section 4
Department of Economics
Taipei, 106
Taiwan
886-2-33668411 (Phone)

HOME PAGE: http://homepage.ntu.edu.tw/~josephw/

Eileen Y. Chou

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Colin F. Camerer

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
626-395-4054 (Phone)
626-432-1726 (Fax)

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