Gary Charness, Francesco Feri, Miguel A. Meléndez-Jiménez, and Matthias Sutte (2012) “Equilibrium Selection in Experimental Games on Networks." working paper, Department of Economics, UC Santa Barbara. [pdf] [ideas]
Abstract. We study behavior and equilibrium selection in experimental network games. We vary two important factors: (a) actions are either strategic substitutes or strategic complements, and (b) subjects have either complete or incomplete information about the structure of a random network. Play conforms strongly to the theoretical predictions, providing an impressive behavioral confirmation of the Galeotti, Goyal, Jackson, Vega-Redondo, and Yariv (2010) model. The degree of equilibrium play is striking, even with incomplete information. We find that under complete information, subjects typically play the stochastically-stable (inefficient) equilibrium when the game involves strategic substitutes, but play the efficient one with strategic complements. Our results suggest that equilibrium multiplicity may not be a major concern Subjects’ actions and realized outcomes under incomplete information depend strongly on both the degree and the connectivity. When there are multiple equilibria, subjects begin by playing the efficient equilibrium, but eventually converge to the inefficient one.