Ain't No Puzzle Anymore: Comparative Statics and Experimental Economics

41 Pages Posted: 8 Feb 2006

See all articles by Armin Schmutzler

Armin Schmutzler

University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: February 2006

Abstract

Many experimental studies deal with the comparison of two versions of one game for which agents' behavior is fundamentally different even though the Nash equilibrium is the same. This paper provides a novel approach to explain such findings. It uses the observation that many of these examples are games with strategic complementarities to predict the direction of change in response to suitable parameter changes, allowing for the possibility that the equilibrium remains unchanged as a boundary case. I show that the predictions derived in this fashion explain the experimental evidence very well. Further, I provide a behavioral justification of the approach, and I explore the relation to standard equilibrium selection theories.

Keywords: experiments, static complements, supermodularity, equilibrium selection, embedding method, increasing differences

JEL Classification: C72, C92

Suggested Citation

Schmutzler, Armin, Ain't No Puzzle Anymore: Comparative Statics and Experimental Economics (February 2006). Available at SSRN: https://ssrn.com/abstract=881736 or http://dx.doi.org/10.2139/ssrn.881736

Armin Schmutzler (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich, CH-8006
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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