PROJECT ABSTRACT A central question in economics is how markets coordinate the behavior of decision makers in a many person decentralized economy. The formal study of equilibria in abstract games has not provided a convincing explanation of the origin of mutually consistent behavior, because it does not provide a useful coordination theory. It assumes what coordination theory seeks to explain. Consequently, coordination theory is an essential complement to equilibrium theory. This project provides an empirical foundation upon which to construct a useful coordination theory, that is, one that makes effective prescriptions, true descriptions, and accurate predictions. Rather than using introspection, the experimental research attempts to determine how people actually use the strategic details of their environment. This project encompasses three projects: the first project tests models of routine learning, especially exponential fictitious play, using extant data sets; the second project attempts to discover emergent conventions based on deductive selection principles in scrambled payoff perturbed (but strategically similar) bargaining situations, and the third project continues our research on market statistic games. The project also includes a component that will improve the conduct and delivery of our research results. During the period covered by the proposal we will be putting primary data sets from prior NSF support up on the world wide web and moving to a new laboratory. Both activities are intended to improve the infrastructure of economic science.
