Department of Economics

I propose a model for a coordination game that examines the potential effects of costly indecision between actions in a repeated stag hunt game. With small enough costs (which I call frictions) the conventional game theoretic predictions are unchanged, which are well­known to be unreliable for coordination games such as the stag hunt. Depending on certain assumptions about behavioral strategies, conflicting hypotheses for the effect of these frictions on outcomes in this game can arise. To gauge these hypotheses I take this game to a laboratory setting to compare a repeated stag hunt with frictions against a standard repeated stag hunt. Comparing short­term and long­term behavior between these games, I find little difference in the behavior between these games after multiple rounds, but significant strategic differences in the first period of these games, suggesting a difference in the development of prior beliefs in these games.