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The Power of Focal Points Is Limited: Even Minute Payoff Asymmetry May Yield Large Coordination Failures.

Abstract:

Since Schelling, it has often been assumed that players make use of salient decision labels to achieve coordination. Consistent with previous work, we find that given equal payoffs, salient labels yield frequent coordination. However, given even minutely asymmetric payoffs, labels lose much of their effectiveness and miscoordination abounds. This raises questions about the extent to which the effectiveness of focal points based on label salience persists beyond the special case of symmetric g...

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Publisher copy:
10.1257/aer.98.4.1443

Authors


Vincent P. Crawford More by this author
Uri Gneezy More by this author
Yuval Rottenstreich More by this author
Journal:
American Economic Review
Volume:
98
Issue:
4
Publication date:
2008
DOI:
URN:
uuid:08d61ce3-a3b1-499f-998b-89bdeddef516
Local pid:
oai:economics.ouls.ox.ac.uk:14857
Language:
English

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