TY - JOUR
T1 - Monotone and bounded interval equilibria in a coordination game with information aggregation
AU - Shadmehr, Mehdi
AU - Bernhardt, Dan
N1 - Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2017/9
Y1 - 2017/9
N2 - We analyze how private learning in a class of games with common stochastic payoffs affects the form of equilibria, and how properties such as player welfare and the extent of strategic miscoordination relate across monotone and non-monotone equilibria. Researchers typically focus on monotone equilibria. We provide conditions under which non-monotone equilibria also exist, where players attempt to coordinate to obtain the stochastic payoff whenever signals are in a bounded interval. In bounded interval equilibria (BIE), an endogenous fear of miscoordination discourages players from coordinating to obtain the stochastic payoff when their signals suggest coordination is most beneficial. In contrast to monotone equilibria, expected payoffs from successful coordination in BIE are lower than the ex-ante expected payoff from ignoring signals and always trying to coordinate to obtain the stochastic payoff. We show that BIE only exist when, absent private information, the game would be a coordination game.
AB - We analyze how private learning in a class of games with common stochastic payoffs affects the form of equilibria, and how properties such as player welfare and the extent of strategic miscoordination relate across monotone and non-monotone equilibria. Researchers typically focus on monotone equilibria. We provide conditions under which non-monotone equilibria also exist, where players attempt to coordinate to obtain the stochastic payoff whenever signals are in a bounded interval. In bounded interval equilibria (BIE), an endogenous fear of miscoordination discourages players from coordinating to obtain the stochastic payoff when their signals suggest coordination is most beneficial. In contrast to monotone equilibria, expected payoffs from successful coordination in BIE are lower than the ex-ante expected payoff from ignoring signals and always trying to coordinate to obtain the stochastic payoff. We show that BIE only exist when, absent private information, the game would be a coordination game.
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U2 - 10.1016/j.mathsocsci.2017.05.007
DO - 10.1016/j.mathsocsci.2017.05.007
M3 - Article
AN - SCOPUS:85026376071
SN - 0165-4896
VL - 89
SP - 61
EP - 69
JO - Mathematical social sciences
JF - Mathematical social sciences
ER -