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Salience and focusing in pure coordination games

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  • Andrew Colman

Abstract

This article is devoted to explaining why decision makers choose salient equilibria or focal points in pure coordination games - games in which players have identical preferences over the set of possible outcomes. Focal points, even when they arise as framing effects based on the labelling of options, are intuitively obvious choices, and experimental evidence shows that decision makers often coordinate successfully by choosing them. In response to arguments that focusing is not rationally justified, a psychological explanation and a conditional justification is offered in terms of a form of reasoning called the Stackelberg heuristic that has been used to explain the selection of payoff-dominant (Pareto-optimal) equilibria in common-interest games. Pure coordination games, if appropriately modelled, are shown to be reducible to common-interest games with payoff-dominant equilibria, and it is argued that focusing can therefore be explained by the Stackelberg heuristic.

Suggested Citation

  • Andrew Colman, 1997. "Salience and focusing in pure coordination games," Journal of Economic Methodology, Taylor & Francis Journals, vol. 4(1), pages 61-81.
    • Handle: RePEc:taf:jecmet:v:4:y:1997:i:1:p:61-81
    DOI: 10.1080/13501789700000004
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    Citations

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    Cited by:

    1. Jan Libich & Dat Thanh Nguyen & Hubert Janos Kiss, 2023. "Running Out of Bank Runs," Journal of Financial Services Research, Springer;Western Finance Association, vol. 64(1), pages 1-39, August.
    2. Maarten C.W. Janssen, 1997. "Focal Points," Tinbergen Institute Discussion Papers 97-091/1, Tinbergen Institute.
    3. Natalya Shelkova, 2015. "Low-Wage Labor Markets and the Power of Suggestion," Review of Social Economy, Taylor & Francis Journals, vol. 73(1), pages 61-88, March.
    4. Colman, Andrew M. & Stirk, Jonathan A., 1998. "Stackelberg reasoning in mixed-motive games: An experimental investigation," Journal of Economic Psychology, Elsevier, vol. 19(2), pages 279-293, April.
    5. Teng, Jimmy, 2018. "Schelling Point as a Refinement of Nash Equilibrium," Conference Papers 10484, Graduate School of Management, St. Petersburg State University.
    6. Cyril Hédoin & Lauren Larrouy, 2016. "Game Theory, Institutions and the Schelling-Bacharach Principle: Toward an Empirical Social Ontology," GREDEG Working Papers 2016-21, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    7. Nicolai J. Foss, 1999. "Understanding Leadership A Coordination Theory," DRUID Working Papers 99-3, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. Nicolai J. Foss, 1998. "Austrian Economics and Game Theory a Preliminary Methodological Stocktaking," DRUID Working Papers 98-28, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    9. Natalya Y. Shelkova, 2008. "Low-wage labor markets amd the power of suggestion," Working Papers 1112, Princeton University, Department of Economics, Industrial Relations Section..
    10. Fay, Scott, 2008. "Selling an opaque product through an intermediary: The case of disguising one's product," Journal of Retailing, Elsevier, vol. 84(1), pages 59-75.
    11. Joško Sindik & Nives Vidak, 2008. "Application of Game Theory in Describing Efficacy of Decision Making in Sportsman's Tactical Performance in Team Sports," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 6(1), pages 53-66.

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