Competition and coordination in experimental minority games

This work presents experimental results on a coordination game in which agents must repeatedly choose between two sides, and a positive fixed payoff is assigned only to agents who pick the minoritarian side. We conduct labo-ratory experiments in which stationary groups of five players play the game for 100 periods, and manipulate two treatment variables: the amount of in-formation about other players ’ past choices and the salience of information regarding the game history (i.e., the length of the string of past outcomes that players can see on the screen while choosing). Our main findings can be summarized as follows: aggregate efficiency in the game is in most cases significantly higher than the level corresponding to the symmetric mixed strategy Nash equilibrium. In addition, providing players with information about individual choices in the group does not improve aggregate efficiency with respect to when such information is absent. Displaying information about more rounds than just the previous one, on the other hand, seems to have a positive effect on aggregate efficiency. At the individual level, ∗We thank Marco Tecilla and the CEEL staff for support in the implementation of the exper-imental software and in the carrying out of the experiments. We also thank participants in the WEHIA 2002 conference, seminar participants in Lille, Pisa and Alessandria, and two anonymous referees for useful comments on a previous draft. Financial support from the Italian Ministry of Education, University and Research (PRIN 2005) and from Sant’Anna School of Advanced Studies (grant A.AMCE.ERIS02GB) are gratefully acknowledged. The usual disclaimer applies