Vecon Lab Centipede Game: Introduction

This program sets up a centipede game in which two players make a series of decisions in alternating order. At each stage in the series, the player who has the decision must choose to stop or continue. The process continues until one person chooses to stop or until the final stage is reached. Payoffs are determined by the stage in which the process stops. The person who chooses Stop earns more than the other person, but payoffs typically increase with successive stages.

This game derives its name from the shape of the extensive-form representation of a game with 100 stages. Behavior in the lab is typically quite different from the unique subgame-perfect Nash prediction, found by "backward induction," which is for the first mover to stop the game in the first stage. For experimental evidence, see McKelvey and Palfrey, "An Experimental Study of the Centipede Game," Econometrica, July 1992. The default setting for the Veconlab program implements their experimental design. The best way to become familiar with this program is to set up and run an test for two participants.

Vecon Lab - January 20, 2017