Abstract
The effect of culture on strategic interaction has been widely explored. However, the effect of the cultural background on focal point selection in tacit coordination games has not yet been examined. To accomplish this goal, in this study we have focused on the individual level of analysis. That is, we constructed a strategic profile to model the behavior of each individual player and then used unsupervised learning methods on the individual data points. We have chosen to examine two groups of participants, Israelis (ICB) and Chinese (CCB), each belonging to a different cultural background representing individualist and collectivist societies, respectively. Clustering the individual strategic profiles has allowed us to gain further insights regarding the differences between the behavioral strategies of each cultural group. The results of this study demonstrate that the cultural background has a profound effect on the strategic profile and on the ability to succeed in tacit coordination games. Moreover, the current study emphasizes the importance of relying on the individual level of analysis and not only on the group level of analysis. The implications of these results and potential future studies are discussed.
Highlights
The effect of culture on strategic interaction has been widely explored [1,2,3,4,5,6,7,8]
The results of this study show that the cultural background has a profound effect on the strategic profile and on the ability to succeed in tacit coordination games
The current study emphasizes the importance of relying on the individual level of analysis and on the group level of analysis
Summary
The effect of culture on strategic interaction has been widely explored [1,2,3,4,5,6,7,8]. The effect of culture on focal point selection in tacit coordination games has not yet been examined. [3,9,10,11]), people are able to coordinate sometimes much better than predicted by game theory by somehow converging to a set of prominent solutions called focal points. In tacit coordination games all the solutions are associated with an equal payoff to both players, and the only task of the players is to converge on the same solution. Other economic games (e.g., Ultimatum game, Dictator, battle of the sexes, prisoner’s dilemma) all include a strategic element associated with the division of goods resulting in that players might receive asymmetric payoffs for different solutions
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