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The More The Better! Increasing Label Saliency as a way to Increase Coordination. An Experimental Investigation

David Rojo-Arjona, R. Stefania Sitzia and Jiwei Zheng
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David Rojo-Arjona: The George L Argyros School of Business and Economics, Chapman University.
R. Stefania Sitzia: School of Economics and Centre for Behavioural and Experimental Social Science, University of East Angle, Norwich.
Jiwei Zheng: School of Economics and Centre for Behavioural and Experimental Social Science, University of East Anglia, Norwich

No 20-02, Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) from School of Economics, University of East Anglia, Norwich, UK.

Abstract: We report an experiment that investigates whether increasing the saliency of the focal point, increases coordination success in tacit coordination and bargaining games. We find unexpectedly high coordination rates not only when the degree of conflict is small but also when it is large. This provides supports to the conjecture that conflict of interests reduces the saliency of the focal point relative to saliency of the payoffs, and because of this, even small payoffs differences lead to significant mis-coordination. Increasing the saliency of the focal point has the effect of drawing attention away from the conflicting payoffs and towards the focal point, restoring its effectiveness as coordination devices. Increased saliency has also the effect of shifting choices from less to more unequal, and sometimes more efficient, outcomes. This results in greater coordination success on the outcome suggested by the payoff-irrelevant cue. Overall coordination success however does not increase.

Keywords: Focal points; Coordination; Conflict of interest; Payoff-irrelevant cues. (search for similar items in EconPapers)
JEL-codes: C78 C91 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-cdm, nep-exp and nep-gth
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