The Institutional Dimension of Salience: Common Understanding and Embeddedness

Since Thomas Schelling’s pioneering work, salience and focal points appear to be useful concepts to explain how coordination is possible. However, game theory has struggled for forty years in trying to give to salience a formal expression. Recent works have succeeded in integrating salience in formal models. However, these works do not explain the origins of salience. This paper argues that salience has an institutional dimension. It builds on and expands David Lewis’ theory of common knowledge by interpreting salience as a public phenomenon where individuals know that they share background information and practical reasoning. More specifically, we show that salience is a public and social phenomenon which occurs when individuals have a common understanding of a given situation. This common understanding results from the fact that individual action is embedded in social relationships organized by institutions. JEL classification: C72, C73, D83.