The Power of Focal Points is Pervasive: An Experimental Study of Strategy Labels in Coordination Games

Abstract

A fundamental question for legal studies is why people obey the law (to the extent that they do). There are two dominant answers: the fear of sanctions, emphasized by economists, and deference to legitmate authority, emphasized by sociologists and psychologists. Recent work posits a third expressive compliance mechanism, one theory for which is that law serves as a focal point that facilitates coordination. Crawford et al. (2008) question the power of focal points in coordination games with asymmetric payoffs, which generate divergent interests in how best to coordinate. They show how some focal labels can influence behavior in pure coordination games but not asymmetric games. We present an experiment that shows focal labels, some involving law, can maintain their influence even when the equilibrium payoffs are asymmetric.