On the role of non-equilibrium focal points as coordination devices

Antoni Bosch-Domènech and Nicolaas Vriend

Journal of Economic Behavior & Organization, 2013, vol. 94, issue C, 52-67

Abstract: Considering a pure coordination game with a large number of equivalent equilibria, we argue that a focal point that is itself not a Nash equilibrium, and is Pareto dominated by all Nash equilibria, may enhance coordination substantially. Besides attracting the players’ choices to itself, such a non-equilibrium focal point may act as an equilibrium selection device that the players use to coordinate on a small subset of Nash equilibria. We present experimental support for these two roles of non-equilibrium focal points as coordination devices, and suggest a theoretical explanation for this.

Keywords: Coordination game; Non-equilibrium; Focal point; Nash equilibrium; Equilibrium selection; Coordination device (search for similar items in EconPapers)
JEL-codes: C72 C91 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: On the Role of Non-equilibrium Focal Points as Coordination Devices (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:94:y:2013:i:c:p:52-67

DOI: 10.1016/j.jebo.2013.07.014

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