The Role of Payoff Focal Points in Location Coordination Games: An Experimental Study
Date Issued
2012
Date
2012
Author(s)
Liao, Wei-Ting
Abstract
In a pure coordination game with multiple NE, subjects can only randomly make their decision when there is no focal point. When a payoff focal point exists, the focal point itself can attract subjects to choose, and hence, subjects can coordinate more often when focal points are present even if the payoff of the focal point is lower. As the payoff of the focal point increases, the chance of achieving coordination also increases. In contrast, when the payoff of the focal point is low, subjects would attempt to coordinate on locations around the focal point. We construct a mixed strategy equilibrium that involves choosing focal points as part of the mixed strategy and present some experimental support for the roles of focal points.
Subjects
Coordination game
Focal point
Mix strategy
Equilibrium selection
Arab Spring
Type
thesis
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