| Coordination Game |
Article Index for Coordination |
Website Links For Coordination |
Information AboutCoordination Game |
| CATEGORIES ABOUT COORDINATION GAME | |
| game theory | |
|
where ''A>C'' and ''D>B''. Rational players will thus cooperate on either of the two strategies to receive a high payoff. Players in the game must agree on one of the two strategies in order to receive a high payoff. If the players do not agree, they receive a lower payoff. EXAMPLES Consider a new product where two technologies are available to two firms with compatible products, and they have to elect a strategy to become the market standard. If both firms agree on the chosen technology, high sales are expected for both firms. If the firms do not agree on the standard technology, few sales result. Both strategies are Nash equilibria of the game. Driving on a road, and having to choose either to Drive on the left or to drive on the right of the road, is also a coordination game. For example, with payoffs 100 meaning no crash and 0 meaning a crash, the coordination game can be defined with the following payoff matrix: In this case there are two Pure Strategy Nash Equilibria :
If we admit ly bad payoffs in this case.) COORDINATION AND EQUILIBRIUM SELECTION Games like the driving example above have illustrated the need for solution to coordination problems. Often we are confronted with circumstances where we must solve coordination problems without the ability to communicate with our partner. Many authors have suggested that particular equilibria are focal for one reason or another. For instance, some equilibria may give Higher Payoffs , be Naturally More Salient , May Be More Fair , or may be Safer . Sometimes these refinements conflict which lead to some of the other interesting coordination games (e.g. Stag Hunt and Battle Of The Sexes ). OTHER COORDINATION GAMES REFERENCES Lewis, David (1969) ''Convention: A Philosophical Study.'' Oxford: Blackwell. |
|
|