Finding the key: The riddle of focal points

Schelling’s concept of a focal point is widely understood and used in game theory, but is often thought to lack adequate theoretical foundations; Schelling’s own account is viewed as metaphorical and mysterious. We reconstruct that account and argue that it contains a sound theory of how rational players solve coordination problems. However, the philosophical framework which supports Schelling’s theory is not a deductive system of the kind presupposed by classical game theory but a pragmatic one.