Template-Type: ReDIF-Paper 1.0 Author-Name: David Rojo Arjona Author-Name-First: David Author-Name-Last: Rojo Arjona Author-Name: Stefania Sitzia Author-Name-First: Stefania Author-Name-Last: Sitzia Author-Name: Jiwei Zheng Author-Name-First: Jiwei Author-Name-Last: Zheng Title: Overcoming coordination failure in games with focal points Abstract: Focal points (Schelling, 1960) have shown limitations as coordination devices in
games with conflict, such as the battle of the sexes games. We experimentally test whether an increase in their salience can counteract the negative impact of conflict on coordination. The intuition is that, in the presence of conflict, the solution to the coordination dilemma offered by the focal point loses importance. Increasing its salience increases its relevance and therefore coordination success. Our results provide strong support for this conjecture. Furthermore, when games feature outcomes with different degrees of payoffs’ inequality (i.e. the difference of players’ payoffs) and efficiency (i.e. the sum of players’ payoffs), increasing salience does not lead to an obvious increase in coordination, unless the salience of the focal point is maximal. Creation-Date: 2021 File-URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2021_011.pdf File-Format: application/pdf Number: 335109305 Classification-JEL: C72, C78, C91, D91 Keywords: coordination games, focal points, salience, conflict of interests, battle-of-the-sexes, intermixed-blocked effect Handle: RePEc:lan:wpaper:335109305