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The Minority Game Unpacked: Coordination and Competition in a Team-based Experiment

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Abstract
In minority games, players in a group must decide at each round which of two available options to choose, knowing that only subjects who picked the minority option obtain a positive reward. Previous experiments on the minority and similar congestion games have shown that players interacting repeatedly are remarkably able to coordinate efficiently, despite not conforming to Nash equilibrium behavior. We conduct an experiment on a Minority-of-three game in which each player is a team composed by three subjects. Each team can freely discuss its strategies in the game and decisions must be adopted through a majority rule. Team discussions are recorded and their content analyzed to detect evidence of strategy co-evolution between teams playing together. Our main results of group discussion analysis show no evidence supporting the mixed strategy Nash equilibrium solution, suggesting that individuals' non conformity to Nash at the choice data level does not derive from imperfect ability to randomize, but by players intentionally not pursuing this type of strategy. In addition, teams that are more successful tend to be more self-centered over time, paying more attention to their own past successful strategies than to the behavior of other teams. Moreover, we find evidence of mutual adaptation between players' strategies, as teams that are more sophisticated (i.e., they pay more attention to other teams' moves) tend, on average, to induce other teams to be less sophisticated and more self-centered. Our results contribute to the understanding of coordination dynamics resting on heterogeneity and co-evolution of decision rules rather than on conformity to equilibrium behavior, both at the aggregate and at the individual level.

Suggested Citation

  • G. Devetag & F. Pancotto & T. Brenner, 2011. "The Minority Game Unpacked: Coordination and Competition in a Team-based Experiment," Working Papers wp770, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp770
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    Cited by:

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    2. Nadir Altinok & Abdurrahman Aydemir, 2015. "The Unfolding of Gender Gap in Education," Working Papers 934, Economic Research Forum, revised Aug 2015.
    3. Yamada, Takashi & Hanaki, Nobuyuki, 2016. "An experiment on Lowest Unique Integer Games," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 463(C), pages 88-102.

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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