Revisiting the Asymmetric Matching Pennies Contradiction in China

Area of Science:

• Behavioral Economics
• Game Theory
• Experimental Economics

Background:

• The asymmetric matching pennies game is a key test of mixed-strategy Nash equilibrium predictions.
• Previous studies, primarily in the US, show players' choices are heavily influenced by their own payoffs, contradicting equilibrium theory.
• This 'own-payoff effect' is a robust finding in experimental economics literature.

Purpose of the Study:

• To investigate if cultural differences affect play in asymmetric matching pennies games.
• To test whether Chinese subjects exhibit the 'own-payoff effect' observed in Western participants.
• To explore behavioral deviations from mixed-strategy Nash equilibrium in a collectivist cultural context.

Main Methods:

• Conducting a series of asymmetric matching pennies games with Chinese participants.
• Closely replicating experimental setups used in prior US-based studies.
• Analyzing subject choices within a Quantal Response Equilibrium (QRE) framework.

Main Results:

• Contrary to US findings, Chinese Row players showed minimal to no own-payoff effects, even with large payoff asymmetries.
• Behavior in the Chinese sample aligned with a positive spite parameter in the QRE model.
• Previous US studies' results aligned with an altruism parameter in the QRE model.

Conclusions:

• Cultural factors, specifically collectivism, may enhance the ability to consider others' perspectives, facilitating equilibrium play.
• The findings challenge the universality of the own-payoff effect in game theory experiments.
• Results suggest a need to incorporate cultural dimensions into economic models of strategic decision-making.