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

Schmidt, Robert J.

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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.

Item Type: Working paper
Series Name: Discussion Paper Series / University of Heidelberg, Department of Economics
Volume: 0660
Place of Publication: Heidelberg
Date Deposited: 27 Mar 2019 12:27
Date: March 2019
Number of Pages: 13
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: coordination, focal points, game theory, methodology, social norms
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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