Strategic Interaction and Conventions

Maria Paz Espinosa, Jaromír Kovářík and Giovanni Ponti ()

No 10/09, ThE Papers from Department of Economic Theory and Economic History of the University of Granada.

Abstract: The scope of the paper is to review the literature that employs coordination games to study social norms and conventions from the viewpoint of game theory and cognitive psychology. We claim that those two alternative approaches are complementary, as they provide different insights to explain how people converge to a unique system of self-fulfilling expectations in presence of multiple, equally viable, conventions. While game theory explains the emergence of conventions relying on efficiency and risk considerations, the psychological view is more concerned with frame and labeling effects. The interaction between these alternative (and, sometimes, competing) effects leads to the result that coordination failures may well occur and, even when coordination takes place, there is no guarantee that the convention eventually established will be the most efficient.

Keywords: Behavioral Game Theory; conventions; social norms (search for similar items in EconPapers)
Pages: 14 pages
Date: 2010-10-01
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-neu
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Persistent link: https://EconPapers.repec.org/RePEc:gra:wpaper:10/09

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