Equilibrium selection: Payoff or risk dominance?. The case of the "weakest link"

Philippe Février; Laurent Linnemer

doi:10.1016/j.jebo.2004.05.005

Equilibrium selection: Payoff or risk dominance?. The case of the "weakest link"

Philippe Février
, Laurent Linnemer

University of Chicago
University of Montpellier (UMR MiVEGEC)

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

Abstract

When a game has more than one Nash equilibrium, a coordination issue arises. Pareto and risk dominations are two available criteria to select one of them. There is a debate on how to use these criteria when they point in different directions. We study the first wave of the Weakest Link show broadcast in France to generate field data on this issue. Observed behavior can be rationalized in terms of Pareto and risk-domination. The payoff-dominant equilibrium is selected if it is not too risky otherwise players coordinate themselves according to risk-dominance. This rationalization is in line with the experimental literature.

Original language	English
Pages (from-to)	164-181
Number of pages	18
Journal	Journal of Economic Behavior and Organization
Volume	60
Issue number	2
DOIs	https://doi.org/10.1016/j.jebo.2004.05.005
Publication status	Published - 1 Jun 2006
Externally published	Yes

Keywords

Coordination
Field experiment
Game show
Pareto and risk domination
Vote

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10.1016/j.jebo.2004.05.005

Cite this

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abstract = "When a game has more than one Nash equilibrium, a coordination issue arises. Pareto and risk dominations are two available criteria to select one of them. There is a debate on how to use these criteria when they point in different directions. We study the first wave of the Weakest Link show broadcast in France to generate field data on this issue. Observed behavior can be rationalized in terms of Pareto and risk-domination. The payoff-dominant equilibrium is selected if it is not too risky otherwise players coordinate themselves according to risk-dominance. This rationalization is in line with the experimental literature.",

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KW - Coordination

KW - Field experiment

KW - Game show

KW - Pareto and risk domination

KW - Vote

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ER -

Equilibrium selection: Payoff or risk dominance?. The case of the "weakest link"

Abstract

Keywords

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