Explaining Focal Points: Cognitive Hierarchy Theory versus Team Reasoning
AbstractThis paper reports experimental tests of two alternative explanations of how players use focal points to select equilibria in one-shot coordination games. Cognitive hierarchy theory explains coordination as the result of common beliefs about players’ pre-reflective inclinations towards the relevant strategies; the theory of team reasoning explains it as the result of the players’ using a non-standard form of reasoning. We report two experiments. One finds strong support for team reasoning; the other supports cognitive hierarchy theory. In the light of additional questionnaire evidence, we conclude that players’ reasoning is sensitive to the decision context.
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Bibliographic InfoPaper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2008-17.
Date of creation: Dec 2008
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salience; focal point; cognitive hierarchy; team reasoning;
Other versions of this item:
- Nicholas Bardsley & Judith Mehta & Chris Starmer & Robert Sugden, 2010. "Explaining Focal Points: Cognitive Hierarchy Theory "versus" Team Reasoning," Economic Journal, Royal Economic Society, vol. 120(543), pages 40-79, 03.
- Nicholas Bardsley & Judith Mehta & Chris Starmer & Robert Sugden, 2008. "Explaining Focal Points: Cognitive Hierarchy Theory versus Team Reasoning," Discussion Papers 2008-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-10 (All new papers)
- NEP-CBE-2009-01-10 (Cognitive & Behavioural Economics)
- NEP-EXP-2009-01-10 (Experimental Economics)
- NEP-GTH-2009-01-10 (Game Theory)
- NEP-SPO-2009-01-10 (Sports & Economics)
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