Strategic behaviour in Schelling dynamics: theory and experimental evidence

Benito-Ostolaza, Juan M. and Branas-Garza, Pablo and Hernández, Penélope and Sanchis-Llopis, Juan A. (2015) Strategic behaviour in Schelling dynamics: theory and experimental evidence. Journal of Behavioral and Experimental Economics, 57 . pp. 134-147. ISSN 2214-8043

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Abstract

In this paper we experimentally test Schelling’s (1971) segregation model and obtain the striking result of full segregation in most of the cases. In addition, we extend Schelling’s model theoretically by adding strategic behaviour and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far from full segregation. We run experiments for this extended Schelling model, and find that the percentage of full segregated societies is notably reduced when the cost of moving is high, but it is not affected when it is low, relative to the baseline with costless moving. We also find that the degree of segregation depends on the distribution of strategic subjects relative of a baseline model where moving is costless.

Item Type: Article
Additional Information: Available online 6 June 2015
Keywords (uncontrolled): Subgame perfect equilibrium, segregation, experimental games.
Research Areas: A. > Business School > Economics
Item ID: 16798
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Depositing User: Pablo Branas Garza
Date Deposited: 03 Jun 2015 16:32
Last Modified: 12 Sep 2017 11:05
URI: http://eprints.mdx.ac.uk/id/eprint/16798

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