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65Principle · Group 8

Focal Points

Schelling points and coordination

“When people have to coordinate without communicating, they choose the answer everyone considers obvious, and if you set that reference point, you steer the outcome.”

Many coordination problems have countless equally good solutions, as long as everyone picks the same one.

Group 8: Interaction, Alliances and NegotiationT5 Game Theory, Negotiation and Conflict
Go to the in-depth section ↓
Two dots at opposite edges, between them a flickering web of dashed lines and many pale circles. At the turning point a single circle lights up in gold, both dots draw their line there and meet; finally, a new gold circle lights up somewhere else, and the lines bend toward it.
In short

When people have to coordinate without communicating, they choose the answer everyone considers obvious, and if you set that reference point, you steer the outcome.

What it’s about: Many coordination problems have countless equally good solutions, as long as everyone picks the same one. Without being able to talk, people then don’t ask which solution would be objectively best. They ask which one the others will choose, and which one the others expect them to choose. The answer is usually the solution that stands out: the round number, the middle, the most familiar, the first. Such solutions are called focal points.

In depth

The principle in detail

Three steps through the principle: grasp it, place it, put it to work. Open each topic on its own.

The core messageCore statement and 3 clarifications
In essence

Without communicating, people settle on what stands out and what they expect the others to choose as well.

It does not say
That the focal point is the best solution. It can lock in a bad solution simply because everyone is used to it.
It does not say
That the same thing seems obvious to everyone. What stands out depends on culture, place and experience.
It also says
If you set a reference point early and visibly, you help determine where the others end up.
The explanationBecause everyone expects everyone else to choose the focal point, it is stable.

Because everyone expects everyone else to choose the focal point, it is stable. That is why whoever sets it has influence.

The question

Which reference points steer your team, and who set them?

The signs3 signs when you heed it · 3 when you overlook it
When you heed it
  • Recurring coordination in your team has fixed times, places and rules.
  • In negotiations, you bring your reference point into play early.
  • You explain to newcomers on the team what everyone goes by.
When you overlook it
  • You move well-established meetings for no good reason, and afterward coordination no longer works.
  • In negotiations, you end up at the round number the other side named.
  • Newcomers get it wrong because something else seems obvious to them.
The backgroundFrom Thomas C. Schelling’s book “The Strategy of Conflict” (1960). · T5 Game Theory, Negotiation and Conflict
  1. 1960
    OriginThomas C. Schelling

    The Strategy of Conflict

  2. 1969
    SupplementedDavid K. Lewis

    Convention

  3. 1994
    SupplementedJudith Mehta, Chris Starmer and Robert Sugden

    The Nature of Salience: An Experimental Investigation of Pure Coordination Games

  4. Tradition T5
    TraditionGame Theory, Negotiation and Conflict

    Thomas C. Schelling, Robert Axelrod, Herman Kahn, Roger Fisher and William Ury

    See the tradition on the Origin page
Read more: the full background

From Thomas C. Schelling’s book “The Strategy of Conflict” (1960). Supplemented by David K. Lewis, “Convention” (1969), and the experiment by Judith Mehta, Chris Starmer and Robert Sugden (1994).

The research3 sources: 1 classic, 1 theory, 1 experiment · 1960–1994 · with limitations of the research
3 sources1960–1994 period1 classic1 theory1 experiment
Strength of evidence
  1. weak
  2. moderate
  3. strong

Surveys and a controlled experiment support the finding that people settle on solutions that stand out without communicating; the claim that whoever sets the reference point steers the outcome is an inference.

  1. 1960
    Classic
    Thomas C. Schelling

    “The Strategy of Conflict”: informal surveys on meeting place, time of day and division; people coordinate on solutions that stand out without communicating.

  2. 1969
    Theory
    David K. Lewis

    “Convention”: uses Thomas C. Schelling’s ideas to explain how social conventions arise.

  3. 1994
    Experiment
    Judith Mehta, Chris Starmer and Robert Sugden

    “The Nature of Salience: An Experimental Investigation of Pure Coordination Games” (American Economic Review): repeats Thomas C. Schelling’s questions under controlled conditions and confirms that people settle on solutions that stand out.

Where the research reaches its limits
  • Focal points depend on culture, place and time; what seems obvious to some is unknown to others.
  • They can lock in bad solutions simply because everyone is used to them.
  • Exactly how a focal point arises has not been fully explained to this day.
  • Thomas C. Schelling’s figures come from informal surveys, and the claim that whoever sets the reference point steers the outcome has not been measured.
Read more: what research shows

Thomas C. Schelling described the concept in 1960 in “The Strategy of Conflict.” He reports on informal surveys: most people would meet a stranger in New York at Grand Central Station at noon, and when asked to divide $100, 36 of 40 respondents claimed exactly half. He applied the idea to tacit bargaining between adversaries, for example to the question of which lines keep a war limited. In 1969, David K. Lewis used it to explain how social conventions arise. In 1994, Judith Mehta, Chris Starmer and Robert Sugden repeated Thomas C. Schelling’s questions under controlled conditions and confirmed that people are remarkably good at settling on solutions that stand out. These studies do not measure whether whoever sets the reference point steers the outcome.

The related principles57 Strategic Interdependence · 64 Credible Commitment · 67 Salami Tactics · 81 Path Dependence
Strategic Interdependence

Focal points resolve situations described by 57 Strategic Interdependence: your best course of action depends on what the others do

Credible Commitment

Whoever commits first and visibly often sets the focal point (64 Credible Commitment)

Salami Tactics

67 Salami Tactics exploits the conspicuous lines and stays just below them with every step

Path Dependence

81 Path Dependence explains why well-worn reference points persist even when better ones exist

Read more: the full text

Focal points resolve situations described by 57 Strategic Interdependence: your best course of action depends on what the others do. Whoever commits first and visibly often sets the focal point (64 Credible Commitment); 67 Salami Tactics exploits the conspicuous lines and stays just below them with every step. 81 Path Dependence explains why well-worn reference points persist even when better ones exist.

The action steps5 action steps: List your team’s fixed reference points: times, places, numbers, rules.
  1. List your team’s fixed reference points: times, places, numbers, rules. Ask who set them and whether they still fit.

  2. Give recurring coordination a clear anchor, such as a fixed day of the week or a default rule.

  3. In negotiations, put your number on the table early and visibly, before the midpoint between two outside offers takes hold.

  4. When you change a reference point, make the new one unmistakable and valid for everyone at the same time.

  5. Check whether people from a different background find the same things obvious as you do.

The reflection questions3 questions: Which time, number or place does your team go by without it ever having been decided?
  1. Which time, number or place does your team go by without it ever having been decided?
  2. In which negotiation did the other side last set the reference point?
  3. Which well-worn reference point would you need to change, and how will you make the new one unmistakable?

Take your time with one question. Write down your answer – or talk it over with someone you trust.

To finish
The picture to rememberThe animation once more, with an explanation
  1. Two dots at opposite edges, between them a flickering web of dashed lines and many pale circles
  2. At the turning point a single circle lights up in gold, both dots draw their line there and meet
  3. Finally, a new gold circle lights up somewhere else, and the lines bend toward it
Strategy Check

Who sets the reference point in your team?

Get your profile across all 12 groups in about 10 to 15 minutes.

Start the Strategy Check
In context

Group 8: Interaction, Alliances and Negotiation

Guiding question: How do you act when others are in the game too?

Stage 4 of 5: Act with others

Where the 92 principles come from: eight traditions of strategy, from classical war theory to dealing with uncertainty.

More about the origin

Background: WEGVISOR’s own selection from the strategy literature · More about the origin

Examples

The principle in practice

From the different spheres of society.

Education

Thomas C. Schelling, Grand Central Station and Focal Points

The economist Thomas C. Schelling asks students where they would meet a stranger in New York without being able to arrange anything beforehand. Most give the same answer: Grand Central Station at noon. Out of simple questions like these, the concept of focal points emerges in 1960.

Focal Points
Media

The 8 p.m. Tagesschau and Focal Points

For decades, the main edition of the Tagesschau, Germany’s flagship evening news, has aired at 8 p.m. Without anyone ever agreeing on it, millions organize their evenings around it: dinner, phone calls, the children’s bedtime. The journalist Georg Mascolo called it “the Republic’s chime of the hour” (our translation).

Focal Points
Government

Dagen H, Sweden’s Switch to Right-Hand Traffic and Focal Points

On September 3, 1967, Sweden switches from driving on the left to driving on the right nationwide, with every vehicle changing at the same minute. The state replaces an old habit with a new, unmistakable reference point. A single day with its own name and logo makes the switch possible for everyone at once.

Focal Points
Family

Movie: Sleepless in Seattle

In Nora Ephron’s 1993 comedy, a woman proposes to a stranger that they meet on top of the Empire State Building on Valentine’s Day, without him ever agreeing. In the end, the two find each other anyway, thanks to the power of a place and a day that everyone knows.

Focal Points
FAQ

Questions about Focal Points

What does the principle of Focal Points say?

Without communicating, people settle on solutions that stand out and that they expect the others to choose as well. If you set such a reference point, you steer the outcome.

Where do focal points come from?

The concept comes from Thomas C. Schelling, who described it in 1960 in “The Strategy of Conflict.” For this and other work on game theory, he received the Nobel Memorial Prize in Economic Sciences in 2005.

What examples are there?

Thomas C. Schelling’s survey about a meeting place in New York, the 8 p.m. edition of the Tagesschau (Germany’s main evening news) and Sweden’s Dagen H in 1967. On film, “Sleepless in Seattle” shows it.

How well is Focal Points supported by research?

Evidence: moderate – surveys and a controlled experiment support the finding that people settle on solutions that stand out without communicating; the claim that whoever sets the reference point steers the outcome is an inference.

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