Equilibrium selection in global games with strategic complementarities

David M. Frankel; Stephen Morris; Ady Pauzner

doi:10.1016/S0022-0531(02)00018-2

Equilibrium selection in global games with strategic complementarities

David M. Frankel, Stephen Morris, Ady Pauzner

Research output: Contribution to journal › Article › peer-review

148 Scopus citations

Abstract

We study games with strategic complementarities, arbitrary numbers of players and actions, and slightly noisy payoff signals. We prove limit uniqueness: as the signal noise vanishes, the game has a unique strategy profile that survives iterative dominance. This generalizes a result of Carlsson and van Damme (Econometrica 61 (1993) 989-1018) for two-player, two-action games. The surviving profile, however, may depend on fine details of the structure of the noise. We provide sufficient conditions on payoffs for there to be noise-independent selection.

Original language	English (US)
Pages (from-to)	1-44
Number of pages	44
Journal	Journal of Economic Theory
Volume	108
Issue number	1
DOIs	https://doi.org/10.1016/S0022-0531(02)00018-2
State	Published - Jan 1 2003

All Science Journal Classification (ASJC) codes

Economics and Econometrics

Keywords

Equilibrium selection
Global games
Strategic complementarities
Supermodular games

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10.1016/S0022-0531(02)00018-2

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AB - We study games with strategic complementarities, arbitrary numbers of players and actions, and slightly noisy payoff signals. We prove limit uniqueness: as the signal noise vanishes, the game has a unique strategy profile that survives iterative dominance. This generalizes a result of Carlsson and van Damme (Econometrica 61 (1993) 989-1018) for two-player, two-action games. The surviving profile, however, may depend on fine details of the structure of the noise. We provide sufficient conditions on payoffs for there to be noise-independent selection.

KW - Equilibrium selection

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KW - Strategic complementarities

KW - Supermodular games

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Equilibrium selection in global games with strategic complementarities

Abstract

All Science Journal Classification (ASJC) codes

Keywords

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