Common belief foundations of global games

Stephen Morris, Hyun Song Shin, Muhamet Yildiz

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

We study coordination games under general type spaces. We characterize rationalizable actions in terms of the properties of the belief hierarchies and show that there is a unique rationalizable action played whenever there is approximate common certainty of rank beliefs, defined as the probability the players assign to their payoff parameters being higher than their opponents'. We argue that this is the driving force behind selection results for the specific type spaces in the global games literature.

Original languageEnglish (US)
Pages (from-to)826-848
Number of pages23
JournalJournal of Economic Theory
Volume163
DOIs
StatePublished - May 1 2016

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Global games
  • Higher-order beliefs
  • Rank beliefs
  • Rationalizability
  • Risk-dominance

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