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The University of Southampton
EconomicsPart of Economic, Social and Political Science

1506 An Experimental Study of Uncertainty in Coordination Games (C.A. Ioannou & M. Makris)

Authors : Christos A. Ioannou (University of Southampton) & Miltiadis Makris (University of Southampton)

Paper No 1506


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 first which type of uncertainty drives empirical behavior in
environments with strategic complementarities, and second whether such behavior is consistent
with the theoretical predictions of the corresponding Coordination games. We thus design an
experiment to study the behavior of subjects in Poisson, Global and Common Knowledge
Coordination games. We find that only uncertainty about the number of actual players in large
games influences subjects' behavior. Crucially, such behavior is consistent with the theoretical
prediction of Poisson Coordination games.

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