Marcel van Assen (Tilburg)
Risk aversion and play in coordination games
This study is on the relation between agents’ risk aversion and their play in well-known one-shot two-person symmetric 2x2 coordination games; the Battle of the Sexes, the Stag Hunt, and the Chicken game. Using utility theory and game theory it is demonstrated that risk aversion is negatively associated with playing the alternative containing the two most extreme outcomes in these games. The hypothesis was tested using a questionnaire. In general the hypothesis was confirmed for the Stag Hunt and the Chicken game, but not for the Battle of the Sexes game. It is concluded that because there is much heterogeneity in risk aversion, and because risk aversion affects play in games, it is advisable to attempt to assess risk aversion when studying behavior in games empirically.
In association with the Tinbergen Institute.
- Franc Klaassen (AE)
- Maurice Bun (KE)
- Aljaz Ule (AE/CREED)
- Florian Wagener (KE/CeNDEF)