General Issue in Coordination

Published by Mario Oettler on 14. February 202214. February 2022

Last Updated on 28. April 2023 by Martin Schuster

Let’s consider the following game. It is a typical “battle of the sexes” game.

Payoff matrix for a coordination game

We have two Nash equilibria {Opera; Opera} and {Boxing; Boxing}. The question is now, how do those two players meet? If there is no communication possible, this task is difficult to achieve. They risk ending up in a situation where one player goes to the opera and the other one to boxing, which would yield zero rewards.

Possible Solutions to Coordination Failure

There are many scenarios for coordination failure and ways to solve the coordination problem.

We will discuss the following ones in more detail.

Communication
Payment dominance
Risk dominance
Experience
Schelling Point/ Focus Point
Outside Option
Laws, rules, and conventions
Mixed Strategies
Correlated Strategies
Prices

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