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Can market selection reduce anomalous behaviour in games?

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We use an experiment to study whether market selection can reduce anomalous behaviour in games. In different treatments, we employ two alternative mechanisms, the random mechanism and the auction mechanism, to allocate the participation rights to the red hat puzzle game, a well-known logical reasoning problem. Compared to the random mechanism, the auction mechanism significantly reduces deviations from the equilibrium play in the red hat puzzle game. Our findings show that under carefully designed incentives, market competition can indeed reduce anomalous behaviour in games.

Market competitionMarket selectionAuctionsBounded-rationalityRed hat puzzleLIMITED RATIONALITYEQUILIBRIUM SELECTIONCOGNITIVE REFLECTIONSTRATEGIC THINKINGFOCUSING FAILURESASSET MARKETSMODELSCOORDINATIONERRORSUNCERTAINTY

Choo, Lawrence、Zhou, Xiaoyu

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Southwestern Univ Finance & Econ

Univ Erlangen Nurnberg

2022

European Economic Review

European Economic Review

ISSHP
ISSN:0014-2921
年,卷(期):2022.141
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