Explaining Focal Points: Cognitive Hierarchy Theory versus Team Reasoning

Nicholas Bardsley, Judith Mehta (), Chris Starmer and Robert Sugden

No 2008-17, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: This paper reports experimental tests of two alternative explanations of how players use focal points to select equilibria in one-shot coordination games. Cognitive hierarchy theory explains coordination as the result of common beliefs about players’ pre-reflective inclinations towards the relevant strategies; the theory of team reasoning explains it as the result of the players’ using a non-standard form of reasoning. We report two experiments. One finds strong support for team reasoning; the other supports cognitive hierarchy theory. In the light of additional questionnaire evidence, we conclude that players’ reasoning is sensitive to the decision context.

Keywords: salience; focal point; cognitive hierarchy; team reasoning (search for similar items in EconPapers)
JEL-codes: C72 C92 (search for similar items in EconPapers)
Date: 2008-12
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Citations: View citations in EconPapers (26)

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Journal Article: Explaining Focal Points: Cognitive Hierarchy Theory "versus" Team Reasoning (2010)
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