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|Title:||On the role of non-equilibrium focal points as coordination devices |
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.|
|Document Type:||Working Paper|
|Appears in Collections:||Working Paper Series, School of Economics and Finance, Queen Mary, University of London |
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