IDEAS home Printed from https://ideas.repec.org/p/awi/wpaper/0660.html
   My bibliography  Save this paper

Identifying the Ranking of Focal Points in Coordination Games on the Individual Level

Author

Listed:
  • Schmidt, Robert J.

Abstract

We propose a method to identify the ranking of focal points (Schelling, 1960) on the individual level. By contrast to conventional coordination, where subjects bet on only one alternative, subjects coordinate by the distribution of points. This allows them to invest in multiple alternatives and to weigh their choices. As a result, subjects not only reveal which alternative appears most focal to them, but the ranking of the available alternatives with regard to the degree of focality. In an experiment on the elicitation of social norms (Krupka and Weber, 2013), we compare the proposed mechanism with conventional coordination. The data confirms the theoretical predictions regarding coordination behavior and demonstrates that the proposed technique is suited to identify the heterogeneity of focal points on the individual level. Moreover, using Monte Carlo simulations, we find that the proposed mechanism identifies focal points on the group level significantly more efficiently than ordinary coordination. Finally, we point to the possibility to use the mechanism as a simple and direct tool to measure the degree of strategic uncertainty on the individual level.

Suggested Citation

  • Schmidt, Robert J., 2019. "Identifying the Ranking of Focal Points in Coordination Games on the Individual Level," Working Papers 0660, University of Heidelberg, Department of Economics.
  • Handle: RePEc:awi:wpaper:0660
    Note: This paper is part of http://archiv.ub.uni-heidelberg.de/volltextserver/view/schriftenreihen/sr-3.html
    as

    Download full text from publisher

    File URL: http://nbn-resolving.de/urn/resolver.pl?urn=urn:nbn:de:bsz:16-heidok-262344
    File Function: Frontdoor page on HeiDOK
    Download Restriction: no

    File URL: http://archiv.ub.uni-heidelberg.de/volltextserver/26234/1/Schmidt_2019_dp660.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Vincent P. Crawford & Uri Gneezy & Yuval Rottenstreich, 2008. "The Power of Focal Points Is Limited: Even Minute Payoff Asymmetry May Yield Large Coordination Failures," American Economic Review, American Economic Association, vol. 98(4), pages 1443-1458, September.
    2. Pope, Devin G. & Pope, Jaren C. & Sydnor, Justin R., 2015. "Focal points and bargaining in housing markets," Games and Economic Behavior, Elsevier, vol. 93(C), pages 89-107.
    3. Crawford, Sue E. S. & Ostrom, Elinor, 1995. "A Grammar of Institutions," American Political Science Review, Cambridge University Press, vol. 89(3), pages 582-600, September.
    4. Frank Heinemann & Rosemarie Nagel & Peter Ockenfels, 2009. "Measuring Strategic Uncertainty in Coordination Games," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 181-221.
    5. Binmore, Ken & Samuelson, Larry, 2006. "The evolution of focal points," Games and Economic Behavior, Elsevier, vol. 55(1), pages 21-42, April.
    6. Mehta, Judith & Starmer, Chris & Sugden, Robert, 1994. "The Nature of Salience: An Experimental Investigation of Pure Coordination Games," American Economic Review, American Economic Association, vol. 84(3), pages 658-673, June.
    7. Erin L. Krupka & Roberto A. Weber, 2013. "Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary?," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 495-524, June.
    8. Casajus, Andre, 2000. "Focal Points in Framed Strategic Forms," Games and Economic Behavior, Elsevier, vol. 32(2), pages 263-291, August.
    9. Isoni, Andrea & Poulsen, Anders & Sugden, Robert & Tsutsui, Kei, 2013. "Focal points in tacit bargaining problems: Experimental evidence," European Economic Review, Elsevier, vol. 59(C), pages 167-188.
    10. Catherine C. Eckel & Philip J. Grossman, 2008. "Forecasting Risk Attitudes: An Experimental Study Using Actual and Forecast Gamble Choices," Monash Economics Working Papers archive-01, Monash University, Department of Economics.
    11. Bock, Olaf & Baetge, Ingmar & Nicklisch, Andreas, 2014. "hroot: Hamburg Registration and Organization Online Tool," European Economic Review, Elsevier, vol. 71(C), pages 117-120.
    12. Isoni, Andrea & Poulsen, Anders & Sugden, Robert & Tsutsui, Kei, 2019. "Focal points and payoff information in tacit bargaining," Games and Economic Behavior, Elsevier, vol. 114(C), pages 193-214.
    13. Janssen, Maarten C.W., 2006. "On the strategic use of focal points in bargaining situations," Journal of Economic Psychology, Elsevier, vol. 27(5), pages 622-634, October.
    14. Sugden, Robert & Zamarron, Ignacio E., 2006. "Finding the key: The riddle of focal points," Journal of Economic Psychology, Elsevier, vol. 27(5), pages 609-621, October.
    15. Maarten Janssen, 2001. "Rationalizing Focal Points," Theory and Decision, Springer, vol. 50(2), pages 119-148, March.
    16. Andrea Isoni & Anders Poulsen & Robert Sugden & Kei Tsutsui, 2014. "Efficiency, Equality, and Labeling: An Experimental Investigation of Focal Points in Explicit Bargaining," American Economic Review, American Economic Association, vol. 104(10), pages 3256-3287, October.
    17. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    coordination; focal points; game theory; methodology; social norms;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:awi:wpaper:0660. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gabi Rauscher) The email address of this maintainer does not seem to be valid anymore. Please ask Gabi Rauscher to update the entry or send us the correct email address. General contact details of provider: http://edirc.repec.org/data/awheide.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.