Explain the concept of coordination games in game theory.

Explain the concept of coordination games in game theory.

Coordination games in game theory refer to situations where players can achieve a higher payoff by coordinating their actions and choosing the same strategy. In these games, players have multiple pure strategy options, and the outcome depends on the coordination of their choices. The key characteristic of coordination games is that there are multiple Nash equilibria, where all players are satisfied with their choices. However, reaching a Nash equilibrium may require players to communicate, signal their intentions, or have a shared understanding of the situation. Overall, coordination games highlight the importance of cooperation and communication among players to achieve the best possible outcome.