Developmental equilibrium selection

Abstract

This paper studies whether Payoff dominance is more or less natural than Risk dominance using a sample of more than a thousand of teenagers. Participants in two Coordination games were asked to select a strategy but also to choose a reason (among four) to explain their choice. They also filled a CRT, a short financial quiz, and a risk decision task. The entire experiment was hypothetical.

As main conclusions, we obtained that playing Payoff dominance is more natural than playing Risk dominance. In addition, it is observed that subjects do not improve their strategic sophistication with age. Indeed, everything points to the fact that moving forward in terms of education provides essential cognitive skills that foster a greater capacity for strategic thinking. No gender difference was found.

JEL cordes: C7, C99, D90

Status: Working Paper