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Equilibrium Selection, Similarity Judgments and the“Nothing to Gain/Nothing to Lose”Effect

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  • Jonathan W. Leland

Abstract

Rubinstein (1988, 2003) and Leland (1994, 1998, 2001, 2002) have shown that choices based on similarity judgments will account for the vast majority of observed violations of expected and discounted utility. In this paper, I show that such judgments also explain which equilibria will be selected in single-shot games with multiple equilibria, predict circumstances in which non-equilibria outcomes may predominate in such games, and predict circumstances in which specific pure strategy outcomes will predominate in games with no pure strategy equilibria.
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  • Jonathan W. Leland, 2006. "Equilibrium Selection, Similarity Judgments and the“Nothing to Gain/Nothing to Lose”Effect," Levine's Working Paper Archive 321307000000000378, David K. Levine.
    • Handle: RePEc:cla:levarc:321307000000000378
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    1. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December.
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    Cited by:

    1. Jonathan W. Leland & Mark Schneider, 2015. "Salience and Strategy Choice in 2 × 2 Games," Games, MDPI, vol. 6(4), pages 1-39, October.
    2. repec:cup:judgdm:v:10:y:2015:i:2:p:123-129 is not listed on IDEAS
    3. Schneider, Mark & Leland, Jonathan W., 2015. "Reference dependence, cooperation, and coordination in games," Judgment and Decision Making, Cambridge University Press, vol. 10(2), pages 123-129, March.

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