An Experimental Study Of Uncertainty In Coordination Games

Global games and Poisson games have been proposed to address equilibrium indeterminacy in Coordination games. The former assume that agents face idiosyncratic uncertainty about economic fundamentals, whereas the latter model the number of actual players as a Poisson random variable to capture population uncertainty in large games. Given that their predictions differ, it is imperative to understand which type of uncertainty drives behavior, if any. Recent experimental literature finds that subjects' behavior after limited game-play is similar in Global and Common Knowledge Coordination games, thus casting doubts on whether idiosyncratic uncertainty about economic fundamentals is an important determinant of inexperienced subjects' behavior. The more recent Poisson Coordination games have not been investigated experimentally. We design an experiment to study the behavior of subjects in single-shot Poisson, Global and Common Knowledge Coordination games. While corroborating the above experimental literature, our findings also suggest that uncertainty about the number of actual players in large games does influence subjects' behavior in single-shot games. Crucially, such behavior is, in fact, consistent with the theoretical prediction of Poisson Coordination games.