Working Paper: NBER ID: w15609
Authors: Steven D. Levitt; John A. List; David H. Reiley Jr.
Abstract: The minimax argument represents game theory in its most elegant form: simple but with stark predictions. Although some of these predictions have been met with reasonable success in the field, experimental data have generally not provided results close to the theoretical predictions. In a striking study, Palacios-Huerta and Volij (2007) present evidence that potentially resolves this puzzle: both amateur and professional soccer players play nearly exact minimax strategies in laboratory experiments. In this paper, we establish important bounds on these results by examining the behavior of four distinct subject pools: college students, bridge professionals, world-class poker players, who have vast experience with high-stakes randomization in card games, and American professional soccer players. In contrast to Palacios-Huerta and Volij's results, we find little evidence that real-world experience transfers to the lab in these games--indeed, similar to previous experimental results, all four subject pools provide choices that are generally not close to minimax predictions. We use two additional pieces of evidence to explore why professionals do not perform well in the lab: (1) complementary experimental treatments that pit professionals against preprogrammed computers, and (2) post-experiment questionnaires. The most likely explanation is that these professionals are unable to transfer their skills at randomization from the familiar context of the field to the unfamiliar context of the lab.
Keywords: minimax; game theory; laboratory experiments; field behavior
JEL Codes: C72; C9; C91; C92; C93; D01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Real-world experience (C90) | effective minimax strategy execution (C72) |
| Failure to recognize connection between lab games and real-life scenarios (C92) | lack of minimax strategy adherence (C72) |