Social and economic interactions often require participants to coordinate their actions. In this kind of situation, coordination is an inherently strategic issue, giving rise to games with a multiplicity of Nash equilibria, which are potentially rankable in terms of social desirability. Coordination on an equilibrium, if achieved and maintained, may form a convention for a group or a society: Once a particular way of doing things becomes established as a rule, it continues in force because individuals prefer to conform to the rule given the expectation that others are going to conform.
Conventions specifying how to collaborate in a joint project, on what side to drive, how to allocate tasks in a team, or how to share the product of joint work and standards such as software or hardware platforms are examples, among many, of successful coordination.
We show that the characteristics of the structure of interaction can potentially affect which convention emerges in the long run; moreover, the emerging convention in a given interaction can depend on decision-makers’ cognitive mode and rationality. Finally, we explore the interplay of these two dimensions in selecting the long run convention.