Game Theoretic Models as a Framework for Analysis: The Case of Coordination Conventions
Advances in Economics: Theory and Applications, Vol. 2, June 2006
29 Pages Posted: 14 Feb 2007 Last revised: 4 Nov 2007
This paper examines game theoretic models of coordination conventions. Firstly, the paper shows that static models of coordination cannot explain the emergence of coordination conventions. The best interpretation of these models is that they study the conditions under which coordination is possible. The examination of these conditions suggests that history and existing institutions are important in the process of emergence of institutions. Secondly, an examination of dynamic models of coordination conventions reveals that some of these models explicate some of the ways in which coordination may be brought about in the model world. Nevertheless, consideration of these models fortifies the point that history and existing institutions are crucial for explaining the emergence of conventions in the real world. Based on these observations, the paper suggests that game theory as a framework of analysis is the best possible interpretation of game theoretic models of coordination conventions.
Keywords: Game Theory, Coordination, Convention, economic methodology
JEL Classification: B20, B41, C70
Suggested Citation: Suggested Citation