Template-Type: ReDIF-Paper 1.0 Author-Name: Konstantinos Georgalos Author-Name-First: Konstantinos Author-Name-Last: Georgalos Author-Name: Indrajit Ray Author-Name-First: Indrajit Author-Name-Last: Ray Author-Name: Sonali Sen Gupta Author-Name-First: Sonali Author-Name-Last: Sen Gupta Title: Coarse correlation and coordination in a game Abstract: In a coarse correlated equilibrium (Moulin and Vial 1978), each player finds it optimal to commit ex ante to the future outcome from a probabilistic correlation device instead of playing any strategy of their own. In this paper, we consider a specific two-person game with unique pure Nash and correlated equilibrium and test the concept of coarse correlated equilibrium with a device
which is an equally weighted lottery over three symmetric outcomes in the game including the Nash equilibrium, with higher expected payoff than the Nash payoff (as in Moulin and Vial 1978). We also test an individual choice between a lottery over the same payoffs with equal probabilities and the sure payoff as in the Nash equilibrium of the game. Subjects choose the individual lottery, however, they do not commit to the device in the game and instead coordinate to play the Nash equilibrium. We explain this behaviour as an equilibrium in the game. Creation-Date: 2017 File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2017_003.pdf File-Format: application/pdf Number: 151235570 Classification-JEL: C72, C91, C92, D63, D83 Keywords: Correlation, Coordination, Lottery Handle: RePEc:lan:wpaper:151235570