On the Role of Non-Equilibrium Focal Points as Coordination Devices

50 Pages Posted: 18 Mar 2008

See all articles by Antoni Bosch i Domènech

Antoni Bosch i Domènech

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Nicolaas J. Vriend

Queen Mary, University of London - Department of Economics

Date Written: February 2008

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.

Keywords: Coordination game, Focal point, Nash equilibrium, Equilibrium selection, Coordination device, LeeX

JEL Classification: C72, C91

Suggested Citation

Bosch i Domènech, Antoni and Vriend, Nicolaas J., On the Role of Non-Equilibrium Focal Points as Coordination Devices (February 2008). Available at SSRN: https://ssrn.com/abstract=1107163 or http://dx.doi.org/10.2139/ssrn.1107163

Antoni Bosch i Domènech (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-93) 542 27 28 (Phone)
(34-93) 542 17 46 (Fax)

Nicolaas J. Vriend

Queen Mary, University of London - Department of Economics ( email )

Mile End Road
London, E1 4NS
United Kingdom
+44 (0)20 7882 5096 (Phone)
+44 (0)20 8983-3580 (Fax)

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