Abstract: Focal Points in Pre-Game Communication

Rabin (1991) presents a model of players negotiating prior to the play of a two-player, complete-information game, and assumes that players can reach voluntary agreements and play any Nash equilibrium in the game. In this paper, I develop a model in which players negotiate over only some focal set of Nash equilibria. For every set of equilibria in a game, I develop a solution concept under the assumption that this set is focal. I explore how such focal sets can enhance efficiency.