Optimization incentive and relative riskiness in experimental stag-hunt games

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14 January 2014

We compare the experimental results of three stag-hunt games. In contrast to Battalio et al. (Econometrica 69:749–764, 2001), our design keeps the riskiness ratio of the two strategies at a constant level as the optimization premium is increased. We define the riskiness ratio as the relative payoff range of the two strategies. We find that decreasing the riskiness ratio while keeping the optimization premium constant decreases sharply the frequency of the payoff-dominant equilibrium strategy. On the other hand an increase of the optimization premium with a constant riskiness ratio has no effect on the choice frequencies. Finally, we confirm the dynamic properties found by Battalio et al. that increasing the optimization premium favours best-response and sensitivity to the history of play.