An Experimental Analysis of Nash Refinements in Signaling Games

Abstract

Refinements of Nash equilibrium are investigated in two-person signaling game experiments. The experiments cover several nested refinements: Bayes–Nash, sequential, intuitive, divine, universally divine, NWBR, and stable. The experimental data suggest that subjects select the more refined equilibria up to divinity. However, an anomaly occurs in one game in which the stable equilibrium is preferred to an NWBR equilibrium. Since the refinements are nested this anomaly implies that outcomes are game specific. Deviations from Nash behavior do not seem to follow any specific decision rule (e.g., Nash, minimax, principle of insufficient reason, etc.). Most choices by both players are part of some Nash equilibrium, but deviations from equilibrium behavior occur when the choices are part of different equilibria.