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Public information and global games with strategic complements and substitutes

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  • Lee, Kyounghun
  • Oh, Frederick Dongchuhl

Abstract

This study examines the effects of public information on players’ actions in global games with strategic complements and substitutes. Specifically, we consider the protest game, wherein a group of citizens decide whether to participate in a protest against a government. After observing private signals and a public signal about the government’s strength, each citizen decides whether or not to participate in the protest. The participation can be both strategic complements and strategic substitutes because the number of protesters increases both the probability of protest success and the probability of a government crackdown. We find that the likelihood of protest success decreases (increases) with the precision of the public signal if the government’s strength is expected to be strong (weak). However, increasing the precision of the public signal is more likely to reduce citizens’ participation as protest decisions exhibit more strategic substitutability.

Suggested Citation

  • Lee, Kyounghun & Oh, Frederick Dongchuhl, 2021. "Public information and global games with strategic complements and substitutes," Economics Letters, Elsevier, vol. 199(C).
    • Handle: RePEc:eee:ecolet:v:199:y:2021:i:c:s0165176520304638
    DOI: 10.1016/j.econlet.2020.109703
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    Cited by:

    1. Oh, Frederick Dongchuhl & Park, Junghum, 2023. "A large creditor in contagious liquidity crises," Journal of Banking & Finance, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    Protest game; Global game; Strategic complements; Strategic substitutes; Public information;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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