1. Outline  In-Class Experiment on a Coordination Game  Test of Equilibrium Selection I :Van Huyck, Battalio, and Beil (1990)  Test of Equilibrium Selection II :Van Huyck, Battalio, and Beil (1991)  Test of Equilibrium Selection III : Copper, DeJong, Forsythe, and Ross (1990)

2. The Median Action Game  n (odd) players  Strategy space =

3. Game : a=$0.1, b=$0.05, c=$0.6

4. Hypotheses: Deductive vs. Inductive Principles  Payoff Dominance  Security (Maximin}  History Dependent  For t > 1, Median (t) =

5. Game : a=$0.1, b=$0.0, c=$0.6

6. Game : a=$0.0, b=$0.05, c=$0.7

7. Hypotheses: Deductive vs. Inductive Principles  Payoff Dominance:  Security (Maximin}:  For t > 1, median (t)

8. Experimental Design n=9 * Only median was announced after every round

9. Test of Deductive Selection Principles in Period 1

10. Hypotheses: Deductive vs. Inductive Principles  Payoff Dominance:  Security (Maximin}:  For t > 1, median (t)

11. Observations  In game, neither payoff-dominance or security is salient: 15% chose 7 and 15% chose 3.  In game, payoff-dominance is salient: 52% chose 7  In game, security is salient: 44% chose 4  Seven times as many subjects played above 4 than below 4

12. Test of Deductive Selection Principles in Period 1

13. Influence of Initial Median (M(1))

14. Experimental Design n=9 * Only median was announced after every round

15. Salience of Last Median in a Related Game

16. Did Selection Principle Change?: Period 1 vs. Period 11

17. Summary In games where neither payoff-dominance nor secure equilibrium was salient, both predictions were infrequently played. History-dependent principle works: The initial median is a perfect predictor for subsequent behaviors. Experience increases the salience of payoff-dominance