<p>There is an idea of a Schelling (focal) point (see <a href="https://www.hup.harvard.edu/catalog.php?isbn=9780674840317" rel="nofollow noreferrer">Schelling 1960</a>). The idea is that sometimes, even without communication,  agents can arrive at the same equilibrium.</p>
<p>Schelling uses the following example: if you are to meet someone in New York City, but you cannot talk the person, then when and where will you choose to meet? This is game with multiple equilibria. Schelling then did a survey and found the most common answer was noon at the information center Grand Central Terminal. There is nothing that makes this 'better'than other equilibria, but its tradition as a meeting place  makes it a natural &quot;focal point&quot;.</p>
<p>So if we know what options A and B are we could find if one of them could be a Schelling point. That would then let us to make more refined prediction.</p>
<p>This also applies just to multiple equilibria. I don't know about any theory pertaining to situation where there are none.</p>

CC BY-SA 4.0
2022-05-31T22:36:55.070Z
2022-05-31T22:36:55.070Z
1muflon1
<p>Let's consider a simple non-cooperative one period game. Let's note that it is relatively easy to run an experiment which will very closely reproduce the theoretical model (e.g. unfamiliar people are offered to play a game once and payed with cash their payoff in the game).</p>
<p>If such game has a single Nash equlibirum, it is relatively safe to predict that such NE will be reached in real life (e.g. most probably two people will play &quot;defect&quot; in real-life prisoner's dilemma).</p>
<p><strong>But what if a game has multiple NEs? Is there any scientific way to predict how real people will play this game?</strong> I understand that some guesses can be made about specific cases, like in the first game below each person will choose A or B with equal probabilities, and in the second game both will play A. But is there any general approach?</p>
<div class="s-table-container">
<table class="s-table">
<thead>
<tr>
<th></th>
<th>A</th>
<th>B</th>
</tr>
</thead>
<tbody>
<tr>
<td><strong>A</strong></td>
<td>(1,1)</td>
<td>(0,0)</td>
</tr>
<tr>
<td><strong>B</strong></td>
<td>(0,0)</td>
<td>(1,1)</td>
</tr>
</tbody>
</table>
</div><div class="s-table-container">
<table class="s-table">
<thead>
<tr>
<th></th>
<th>A</th>
<th>B</th>
</tr>
</thead>
<tbody>
<tr>
<td><strong>A</strong></td>
<td>(2,2)</td>
<td>(0,0)</td>
</tr>
<tr>
<td><strong>B</strong></td>
<td>(0,0)</td>
<td>(1,1)</td>
</tr>
</tbody>
</table>
</div>
CC BY-SA 4.0
2022-05-31T22:40:58.640Z
This is a huge topic (or two) in game theory. The relevant keywords are "equilibrium refinement" and "equilibrium selection".
Michael Greinecker
CC BY-SA 4.0
2022-06-01T05:11:45.530Z
@MichaelGreinecker Disappointing to see you support the idea that these concepts actually "predict how real people" will play games in a scientific way.
Giskard
CC BY-SA 4.0
2022-06-01T05:48:19.833Z
@Giskard My impression was that OP was interested in things like payoff dominance from the question. My personal opinion is that games are mathematical objects and not something that exists in the world out there. I also think that the Harsanyi-Selten equilibrium selection program was a colossal failure.
Michael Greinecker
CC BY-SA 4.0
2022-06-01T05:59:19.310Z
@MichaelGreinecker That is why I was surprised to read your comment. The phrases "real life" and "real people" come up in the question at key places, so my impression is that this is about empirically validated predictions.
Giskard
CC BY-SA 4.0
2022-06-01T06:21:48.857Z
@Giskard You have a point. I thought there were a lot of questionable premises (the prisoner's dilemma isn't exactly a good model for a game with a symmetric equilibrium, uniqueness is of little help...) but though this would be the best starting point for a more sophisticated view. But the point is well taken.
Michael Greinecker
<game-theory><behavioral-economics>
Do economics (as a science) provide any hints on how games with none/multiple NEs will be played in real life?
kandi
# Do economics (as a science) provide any hints on how games with none/multiple NEs will be played in real life?

(Asked by: username_0 on 2022-05-31)

Let's consider a simple non-cooperative one period game. Let's note that it is relatively easy to run an experiment which will very closely reproduce the theoretical model (e.g. unfamiliar people are offered to play a game once and payed with cash their payoff in the game).

If such game has a single Nash equlibirum, it is relatively safe to predict that such NE will be reached in real life (e.g. most probably two people will play "defect" in real-life prisoner's dilemma).

**But what if a game has multiple NEs? Is there any scientific way to predict how real people will play this game?** I understand that some guesses can be made about specific cases, like in the first game below each person will choose A or B with equal probabilities, and in the second game both will play A. But is there any general approach?

|  | A | B |
| --- | --- | --- |
| **A** | (1,1) | (0,0) |
| **B** | (0,0) | (1,1) |

|  | A | B |
| --- | --- | --- |
| **A** | (2,2) | (0,0) |
| **B** | (0,0) | (1,1) |

**Tags:** game-theory, behavioral-economics
> **Comments:**
> **username_1**: This is a huge topic (or two) in game theory. The relevant keywords are "equilibrium refinement" and "equilibrium selection".  
> **username_2**: @MichaelGreinecker Disappointing to see you support the idea that these concepts actually "predict how real people" will play games in a scientific way.  
> **username_1**: @Giskard My impression was that OP was interested in things like payoff dominance from the question. My personal opinion is that games are mathematical objects and not something that exists in the world out there. I also think that the Harsanyi-Selten equilibrium selection program was a colossal failure.  
> **username_2**: @MichaelGreinecker That is why I was surprised to read your comment. The phrases "real life" and "real people" come up in the question at key places, so my impression is that this is about empirically validated predictions.  
> **username_1**: @Giskard You have a point. I thought there were a lot of questionable premises (the prisoner's dilemma isn't exactly a good model for a game with a symmetric equilibrium, uniqueness is of little help...) but though this would be the best starting point for a more sophisticated view. But the point is well taken.  

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## 1 answers

### Answer by username_3 on 2022-05-31. Score: 1

There is an idea of a Schelling (focal) point (see [Schelling 1960](https://www.hup.harvard.edu/catalog.php?isbn=9780674840317)). The idea is that sometimes, even without communication, agents can arrive at the same equilibrium.

Schelling uses the following example: if you are to meet someone in New York City, but you cannot talk the person, then when and where will you choose to meet? This is game with multiple equilibria. Schelling then did a survey and found the most common answer was noon at the information center Grand Central Terminal. There is nothing that makes this 'better'than other equilibria, but its tradition as a meeting place makes it a natural "focal point".

So if we know what options A and B are we could find if one of them could be a Schelling point. That would then let us to make more refined prediction.

This also applies just to multiple equilibria. I don't know about any theory pertaining to situation where there are none.


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