Testing Game Theory in the Field: Swedish LUPI Lottery Games

• DOI: 10.2139/ssrn.1007181
• Publication Date: 2011-12-28T12:18:56Z
• Authors: Robert Ostling; Joseph Tao-yi Wang; Eileen Y. Chou; Colin F. Camerer
• Keywords: Lottery

Game theory is usually difficult to test precisely in the field because predictions typically depend sensitively on features that are not controlled or observed. We conduct one such using data from Swedish lowest unique positive integer (LUPI) game. In LUPI game, players pick integers and whoever chose number wins a fixed prize. Theoretical equilibrium derived assuming Poisson-distributed uncertainty about of players, tested both laboratory data. The lab show similar patterns. Despite various deviations equilibrium, there surprising degree convergence toward equilibrium. Some can be rationalized by cognitive hierarchy model.