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Title:Explaining focal points: Cognitive hierarchy theory versus team reasoning PDF Logo
Authors:Bardsley, Nicholas
Mehta, Judith
Starmer, Chris
Sugden, Robert
Issue Date:2008
Series/Report no.:CeDEx discussion paper series 2008-17
Abstract:This paper reports experimental tests of two alternative explanations of how players use focal points to select equilibria in one-shot coordination games. Cognitive hierarchy theory explains coordination as the result of common beliefs about players' pre-reflective inclinations towards the relevant strategies; the theory of team reasoning explains it as the result of the players' using a non-standard form of reasoning. We report two experiments. One finds strong support for team reasoning; the other supports cognitive hierarchy theory. In the light of additional questionnaire evidence, we conclude that players' reasoning is sensitive to the decision context.
Subjects:salience
focal point
cognitive hierarchy
team reasoning
JEL:C72
C92
Document Type:Working Paper
Appears in Collections:CeDEx Discussion Paper Series, The University of Nottingham

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