Nash versus coarse correlation

Georgalos, Konstantinos and Ray, Indrajit and Sen Gupta, Sonali (2020) Nash versus coarse correlation. Experimental Economics, 23. 1178–1204. ISSN 1386-4157

[thumbnail of kgirssg24012020secondrevision]
Text (kgirssg24012020secondrevision)
kgirssg24012020secondrevision.pdf - Accepted Version
Available under License Creative Commons Attribution-NonCommercial.

Download (360kB)


We run a laboratory experiment to test the concept of coarse correlated equilibrium (Moulin and Vial in Int J Game Theory 7:201-221, 1978), with a two-person game with unique pure Nash equilibrium which is also the solution of iterative elimination of strictly dominated strategies. The subjects are asked to commit to a device that randomly picks one of three symmetric outcomes (including the Nash point) with higher ex-ante expected payoff than the Nash equilibrium payoff. We find that the subjects do not accept this lottery (which is a coarse correlated equilibrium); instead, they choose to play the game and coordinate on the Nash equilibrium. However, given an individual choice between a lottery with equal probabilities of the same outcomes and the sure payoff as in the Nash point, the lottery is chosen by the subjects. This result is robust against a few variations. We explain our result as selecting risk-dominance over payoff dominance in equilibrium.

Item Type:
Journal Article
Journal or Publication Title:
Experimental Economics
Additional Information:
The final publication is available at Springer via
Uncontrolled Keywords:
?? economics, econometrics and finance (miscellaneous) ??
ID Code:
Deposited By:
Deposited On:
04 Feb 2020 14:25
Last Modified:
17 Dec 2023 01:47