Center for Behavioral Decision Research

CBDR : Seminar Series : Seminar by Robert Ostling

Field and Lab Convergence in Poisson LUPI Games

	presented by Robert Ostling (Stockhold School of Economics)


	Friday, January 25	link to paper
	Noon-1:15
	Porter 223D	link to Speaker's Site

	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.

	Host at CMU: Weber