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When learning meets salience

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  • David Bodoff

Abstract

Behavior in one-shot coordination games with common knowledge labels can be described by theories of salience and focal points. Behavior in repeated games, including coordination games, can be explained by theories of learning. This paper considers games in which both theories apply, repeated coordination games with common knowledge labels. The research question asks how players combine the two sources of information—salience and the history of play—when making their choices. We specifically ask whether salience, normally considered as a one-shot strategy, continues to influence players’ actions beyond the first round, even while the player might learn from the history of play. We explore two possible mechanisms for such a continuing effect of salience: via an influence on prior beliefs, and/or via a bias, given beliefs. Regression analysis of individual-level choices shows that salience, normally considered only in the context of one-shot games, does exert a lasting effect, with the precise mechanism depending on the details of the game. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • David Bodoff, 2013. "When learning meets salience," Theory and Decision, Springer, vol. 74(2), pages 241-266, February.
    • Handle: RePEc:kap:theord:v:74:y:2013:i:2:p:241-266
    DOI: 10.1007/s11238-012-9325-4
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