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We experimentally study how cognitive noise affects behavior in coordination games.
Our key testable prediction is that equilibrium behavior depends on context, which we
define as the distribution from which games are drawn. This prediction arises from
players efficiently using their limited cognitive resources. Furthermore, this prediction
distinguishes cognitive noise from a large class of alternative behavioral game theory
and learning models. Experimentally, we find that subjects coordinate more frequently
when game payoffs are drawn from a narrower distribution. Nearly 50% of the variability
in behavior can be attributed to cognitive noise rather than alternative sources
of strategic uncertainty.
