Remember the battle of the sexes? It had two pure strategy Nash equilibria – football-football and dance-dance. And in the absence of communication, the couple could end up with those bad outcomes. So how do we prevent such results?
A focal point is a pure strategy Nash equilibrium that all the players select because of some salient feature. An example is the heads or tails game, in which two players guess, and if both pick the same, they win prizes. Results from some experiments show an overwhelming preference for heads over tails. The reason can be that it was the first choice.
In the split money game, two parties can guess any number between 0 and 100. If the sum is lower than 100, both get their respective choices. If it is greater than 100, both get nothing. The majority selects 50.
