Field and Lab Convergence in Poisson LUPI Games
Abstract
In the lowest unique positive integer (LUPI) game, players pick positive integers and the player who chose the lowest unique number (not chosen by anyone else) wins a fixed prize. We derive theoretical equilibrium predictions, assuming fully rational players with Poisson-distributed uncertainty about the number of players. We also derive predictions for boundedly rational players using quantal response equilibrium and a cognitive hierarchy of rationality steps with quantal responses. The theoretical predictions are tested using both field data from a Swedish gambling company, and laboratory data from a scaled-down version of the field game. The field and lab data show similar patterns: in early rounds, players choose very low and very high numbers too often, and avoid focal ("round") numbers. However, there is some learning and a surprising degree of convergence toward equilibrium. The cognitive hierarchy model with quantal responses can account for the basic discrepancies between the equilibrium prediction and the data.
Additional Information
The first two authors, Joseph Tao-yi Wang and Robert Östling, contributed equally to this paper. We are grateful for helpful comments from Tore Ellingsen, Magnus Johannesson, Botond Köszegi, David Laib- son, Erik Lindqvist, Stefan Molin, Noah Myung, Rosemarie Nagel, Charles Noussair, Carsten Schmidt, Dmitri Vinogradov, Mark Voorneveld, Jörgen Weibull, seminar participants at California Institute of Technology, Stockholm School of Economics, Mannheim Empirical Research Summer School 2007, and UC Santa Barbara Cognitive Neuroscience Summer School 2007. Robert Östling acknowledges financial support from the Jan Wallander and Tom Hedelius Foundation. Colin Camerer acknowledges support from the NSF HSD program, HSFP, and the Betty and Gordon Moore Foundation.Attached Files
Published - LUPI_final2_1_.pdf
Updated - Limbo17_1_.pdf
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Additional details
- Eprint ID
- 21988
- Resolver ID
- CaltechAUTHORS:20110203-144706555
- NSF Human and Social Dynamics (HSD) program
- Human Frontier Science Program (HSFP)
- Gordon and Betty Moore Foundation
- Created
-
2012-11-17Created from EPrint's datestamp field
- Updated
-
2019-10-03Created from EPrint's last_modified field
- Series Name
- SSE/EFI Working Paper Series in Economics and Finance
- Series Volume or Issue Number
- 671