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Optimization Incentives and Coordination Failure in Laboratory Stag Hunt Games

Econometrica 2001 69(3), 749-764
This paper reports an experiment comparing three stag hunt games that have the same best-response correspondence and the same expected payoff from the mixed equilibrium, but differ in the incentive to play a best response rather than an inferior response.In each game, risk dominance conflicts with payoff dominance and selects an inefficient pure strategy equilibrium.We find statistically and economically significant evidence that the differences in the incentive to optimize help explain observed behavior.