On the beliefs off the path: An experimental investigation of equilibrium refinement∗
نویسندگان
چکیده
We report the results of an experiment designed to shed light on beliefs off equilibrium paths. The experiment implements an incomplete information club game. A unique outcome results in all perfect Bayesian equilibria, but beliefs and actions off the equilibrium path are unconstrained under all concepts except extensive form rationalizability (EFR) and logit equilibrium. 90% of subject’s decisions confirm with PBE in information sets with unique predictions (i.e. sequential rationality is not violated). The observations in the remaining information sets correspond neatly with the unique predictions of EFR and logit equilibrium, and we argue that models of hierarchical thinking (e.g. EFR) or bounded rationality (e.g. logit equilibrium) are required to explain beliefs off equilibrium paths. JEL classification: C72, C91, D62
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