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Focal points revisited: Team reasoning, the principle of insufficient reason and cognitive hierarchy theory

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  • Bardsley, Nicholas
  • Ule, Aljaž

Abstract

It is well-established that people can coordinate their behaviour on focal points in games with multiple equilibria, but it is not firmly established how. Much coordination game data might be explained by team reasoning, a departure from individualistic choice theory. However, a less exotic explanation is also available based on best-responding to uniform randomisation. We test these two accounts experimentally, using novel games which distinguish their predictions. The results are inconsistent with best-responding to randomisation but consistent with team reasoning as the modal behaviour, though there is also unexplained heterogeneity. Increasing the difficulty of the coordination tasks produces some behaviour suggestive of response to randomisation, but this is a minor feature of the data.

Suggested Citation

  • Bardsley, Nicholas & Ule, Aljaž, 2017. "Focal points revisited: Team reasoning, the principle of insufficient reason and cognitive hierarchy theory," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 74-86.
  • Handle: RePEc:eee:jeborg:v:133:y:2017:i:c:p:74-86
    DOI: 10.1016/j.jebo.2016.10.004
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    More about this item

    Keywords

    Coordination; Team reasoning; Focal points; Bounded rationality;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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