When are Mixed Equilibria Relevant?

Daniel Friedman, Shuchen Zhao   Published : November, 2021   JEL Code: C72, C73, C92   URL to this Article: http://dx.doi.org/10.2139/ssrn.3444439

Abstract

Mixed strategy equilibria — Nash (NE) and maximin (MM) — are cornerstones of game theory, but their empirical relevance has always been questionable. We study in the laboratory two games, each with a unique NE and a unique (and distinct) MM in completely mixed strategies. Treatment variables include the matching protocol (pairwise random vs population mean matching), whether time is discrete or continuous, and whether players can specify explicit mixtures or only pure strategy realizations. NE mixes predict observed behavior relatively well in population mean matching treatments, and predict better than MM in all treatments. However, in most random pairwise treatments, uniform mixes predict better than NE. Regret-based and sign preserving dynamics capture regularities across all treatments.

Keywords

Nash equilibrium; Maximin; Mixed strategy; Sign preserving dynamics; Laboratory experiment