An experimental test of the global-game selection in coordination games with asymmetric players

Abstract

In symmetric binary-choice coordination games, the global-game selection (GGS) has been proven to predict a high proportion of observed choices correctly. In these games, the GGS is identical to the best response to Laplacian beliefs about the fraction of players choosing either action. This paper presents an experiment on asymmetric games in which the GGS differs from the best response to Laplacian beliefs. In these games, the best response to Laplacian beliefs is a better predictor of individual actions than the GGS. In the considered games, the GGS provides poor guidance and also fails to give the right qualitative comparative statics predictions. Simple cognitive hierarchy models yield better predictions. The best response to a Laplacian belief about the distribution of other players’ actions yields the best prediction. Comparing maximum likelihood estimates for four probabilistic models shows that noisy Laplacian-belief or level-k models fit better than an estimated global-game equilibrium.