9311455 Cox The concept of Nash equilibrium (NE) has become central to game theory and to much of modern economics. It is used to understand and predict a broad range of economic phenomena. NE is in fact a rather persuasive idea: Each individual has no incentive to act differently than the NE specifies he will, so long as he believes that the other participants will actually choose the actions the NE specifies for them. But the cogency of the NE concept depends upon each player in a game having correct beliefs about what the other players will do. Several recent papers have developed models in which players learn to play NE -- they learn to have mutually correct beliefs -- through repeated play of a game. This proposal describes a program of experimental research designed to examine and test some of this recent theoretical work. One focus of the experimental research will be to determine whether people generally learn to play some NE but not others. The research will therefore potentially both support and refine the use of NE. It will provide a foundation, for example, for determining whether an economic institution (either an existing institution, or a newly devised solution to an economic problem) produces desirable outcomes. When as often happens, an institution has multiple Nash equilibria, some of them socially desirable and some not, this research will help to determine whether people learn to play the desirable outcomes or the undesirable ones. ***
