The Variable Frame Theory of Focal Points: An Experimental Study

Abstract

In variable frame theory a game is played rationally, but which game gets played is determined by nonrational (e.g., perceptual) player characteristics. These determine their ''frames''-the sets of attributes of the objects of choice they think about. The theory implies that it is rational to play focal points in coordination games with multiple equilibria. The reported experiment confirms most of the theory's claims for such games, including the tradeoff theorem: players who can hope to coordinate only by randomizing over a class of objects trade off its smallness against the probability that it belongs to the partner's frame. (C) 1997 Academic Press.