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Title:On the role of non-equilibrium focal points as coordination devices PDF Logo
Authors:Bosch-Domènech, Antoni
Vriend, Nicolaas J.
Issue Date:2008
Series/Report no.:Working Paper, Department of Economics, Queen Mary, University of London 621
Abstract:Considering a pure coordination game with a large number of equivalent equilibria, we argue, first, that a focal point that is itself not a Nash equilibrium and is Pareto dominated by all Nash equilibria, may attract the players' choices. Second, we argue that such a non-equilibrium focal point may act as an equilibrium selection device that the players use to coordinate on a closely related small subset of Nash equilibria. We present theoretical as well as experimental support for these two new roles of focal points as coordination devices.
Subjects:Coordination game
Focal point
Nash equilibrium
Equilibrium selection
Coordination device
JEL:C72
C91
Document Type:Working Paper
Appears in Collections:Working Paper Series, School of Economics and Finance, Queen Mary, University of London

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