Teaching Nash Equilibrium and Strategy Dominance: A Classroom Experiment on the Beauty Contest

23 Pages Posted: 10 Oct 2003

See all articles by Virtudes Alba-Fernandez

Virtudes Alba-Fernandez

University of Jaén - Department of Statistics

Pablo Brañas-Garza

Middlesex University - Economics Department

Francisca Jimenez-Jimenez

University of Jaén - Department of Economics; University of Valencia - Laboratory for Research in Experimental Economics (LINEEX)

Javier Rodero Cosano

University 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.

JEL Classification: A22, C99, D83

Suggested Citation

Alba-Fernandez, Virtudes and Brañas-Garza, Pablo and Jimenez-Jimenez, Francisca and Rodero Cosano, Javier, Teaching Nash Equilibrium and Strategy Dominance: A Classroom Experiment on the Beauty Contest. Available at SSRN: https://ssrn.com/abstract=437561

Virtudes Alba-Fernandez (Contact Author)

University of Jaén - Department of Statistics ( email )

23071 Jaen
Spain
34 953 01 21 42 (Phone)
34 953 01 20 34 (Fax)

Pablo Brañas-Garza

Middlesex University - Economics Department ( email )

The Burroughs
London, NW4 4BT
United Kingdom

Francisca Jimenez-Jimenez

University of Jaén - Department of Economics ( email )

23071 Jaen
Spain
34 953 01 20 74 (Phone)

University of Valencia - Laboratory for Research in Experimental Economics (LINEEX)

46022 Valencia
Spain

Javier Rodero Cosano

University of Valencia - Laboratory for Research in Experimental Economics (LINEEX)

46022 Valencia
Spain

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