RISK DOMINANCE AND COORDINATION FAILURES IN STATIC GAMES

This article presents: (1) arguments comparing the use of Harsanyi and Selten's risk dominance (a measure of the 'risk' associated with choo sing an action which supports an equilibrium) and payoff dominance as equilibrium selection criteria; (2) new experimental evidence which su ggests the existence of a payoff dominated risk dominant equilibrium i s a necessary (but not sufficient) condition for coordination failure and the existence of a tradeoff between risk dominance nad payoff domi nance; and (3) new experimental evidence which links risk dominance an d payoff dominance to the speed of convergence to equilibrium.