When Are Mixed Equilibria Relevant?

39 Pages Posted: 5 Sep 2019

See all articles by Daniel Friedman

Daniel Friedman

University of California, Santa Cruz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

shuchen zhao

University of California, Santa Cruz

Date Written: August 28, 2019

Abstract

Mixed Nash equilibria are a cornerstone of game theory, but their empirical rel evance has always been controversial. We study in the laboratory two games whose unique NE is in completely mixed strategies; other treatments include the matching protocol (pairwise random vs population mean-matching), whether time is discrete or continuous, and whether players can specify mixtures or only pure strategies. Compar ing point predictions, NE always does better than maximin and often does no worse than Logit QRE. NE predicts better than Center (50-50 mixes) under mean-matching, but otherwise not as well. By contrast, in a dominance solvable game, NE predicts bet ter than alternatives in all treatments. Qualitative and quantitative dynamic models capture regularities across all treatments.

Keywords: Nash equilibrium, minimax, mixed strategy, directional learning, laboratory experiment

JEL Classification: C72, C73, C92

Suggested Citation

Friedman, Daniel and zhao, shuchen, When Are Mixed Equilibria Relevant? (August 28, 2019). Available at SSRN: https://ssrn.com/abstract=3444439 or http://dx.doi.org/10.2139/ssrn.3444439

Daniel Friedman (Contact Author)

University of California, Santa Cruz - Department of Economics ( email )

Social Sciences I
Santa Cruz, CA 95064
United States
831-459-4981 (Phone)
831-459-5900 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Shuchen Zhao

University of California, Santa Cruz ( email )

Santa Cruz, CA 95064
United States
2133599551 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
4
Abstract Views
50
PlumX Metrics