On the role of non-equilibrium focal points as coordination devices

Bosch‐Domènech, Antoni; Vriend, Nicolaas J.

doi:10.1016/j.jebo.2013.07.014

Cited by 11 publications

(3 citation statements)

References 27 publications

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“…Blume and Gneezy (2000) examine the role of endogenous focal points in pure coordination games that lack a common description. Bosch-Domènech and Vriend (2008) show that a focal point that is itself not a Nash equilibrium and is Pareto dominated by all Nash equilibria, may still attract the players' choices. Dugar and Shahriar (2009) analyze the effectiveness of label-based focal points in Pareto-ranked coordination games.…”

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confidence: 96%

Ignorance Is Bliss: An Experimental Study of the Use of Ambiguity and Vagueness in the Coordination Games with Asymmetric Payoffs

Agranov

Schotter

2012

American Economic Journal: Microeconomics

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We consider a game where one player, the Announcer, has to communicate the value of a payoff relevant state of the world to a set of players who play a coordination game with multiple equilibria. While the Announcer and the players agree that coordination is desirable, since the payoffs of the players at the equilibria are unequal, they disagree as to which equilibrium is best. We demonstrate experimentally that in such coordination games, in order to mask the asymmetry of equilibrium payoffs, it may be advantageous for a utilitarian benevolent Announcer to communicate in an ambiguous or vague manner. (JEL C71, D81, D83)

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confidence: 96%

Ignorance Is Bliss: An Experimental Study of the Use of Ambiguity and Vagueness in the Coordination Games with Asymmetric Payoffs

Agranov

Schotter

2012

American Economic Journal: Microeconomics

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“…6 A recommendation can be seen as an extrinsic signal, but by phrasing it as advice, it becomes more salient and is more intrusive than our random signals. A noteworthy finding of this literature is that subjects only follow "credible" recommendations, for example, subjects tend to disregard advice to play an imperfect or a less efficient equilibrium.…”

Section: Related Literaturementioning

confidence: 99%

“…Instead, there is some convergence towards the efficient non-sunspot equilibrium. 6 While the recommendations in these experiments mostly come from the experimenter, there are also experiments where advice is given by players of a previous cohort participating in the experiment (see, e.g., Schotter and Sopher, 2003 or Chaudhuri, Schotter and Sopher, 2009, for such "intergenerational" advice in coordination games).…”

Section: Related Literaturementioning

confidence: 99%

The Power of Sunspots: An Experimental Analysis

2012

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Abstract:We present an experiment in which extrinsic information (signals) may generate sunspot equilibria. The underlying coordination game has a unique symmetric non-sunspot equilibrium, which is also risk-dominant. Other equilibria can be ordered according to risk dominance. We introduce salient but extrinsic signals on which subjects may condition their actions. By varying the number of signals and the likelihood that different subjects receive the same signal, we measure how strong these signals affect behavior. Sunspot equilibria emerge naturally if there are salient public signals. Highly correlated private signals may also cause sunspot-driven behavior, even though this is no equilibrium. The higher the correlation of signals and the easier they can be aggregated, the more powerful they are in dragging behavior away from the risk-dominant to risk-dominated strategies. Sunspot-driven behavior may lead to welfare losses and exert negative externalities on agents, who do not receive extrinsic signals.

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Market Coordination Under Non-Equilibrium Dynamics

Dragicevic

2018

Netw Spat Econ

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On the role of non-equilibrium focal points as coordination devices

Cited by 11 publications

References 27 publications

Ignorance Is Bliss: An Experimental Study of the Use of Ambiguity and Vagueness in the Coordination Games with Asymmetric Payoffs

Ignorance Is Bliss: An Experimental Study of the Use of Ambiguity and Vagueness in the Coordination Games with Asymmetric Payoffs

The Power of Sunspots: An Experimental Analysis

Market Coordination Under Non-Equilibrium Dynamics

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