Payoff dominance
Of several equilibria, the payoff dominant one is the equilibrium every player strictly prefers to the others.
Often misread asTreating payoff dominance as settling equilibrium selection, so the better outcome is simply predicted on the grounds that everybody prefers it.
How to see it
Better for everyone, and still not what happens
When one equilibrium pays every player strictly more than another, it is payoff dominant. That sounds like it ought to settle which one gets played, and it does not, because choosing it requires each player to be confident the others will choose it too.
The checkPreference is not coordination. The payoff dominant equilibrium is often the riskier one to attempt alone, and experiments routinely find players sitting at the other one.
Try itIn the stag hunt, confirm that both players prefer the stag equilibrium. Then ask what you get if you go for stag and your partner does not. If that number worries you, you have just reproduced why payoff dominance does not decide the matter.
Games that show it
Know these first
Leads on to
Easily confused with
Sources
- Harsanyi, J. C. & Selten, R. (1988). MIT Press. Source of risk dominance.