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Noise-independent selection in global games and monotone potential maximizer: A symmetric 3×3 example

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  • Honda, Jun
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    Abstract

    This note studies the relationship between the global game and the generalized potential game approaches. We provide a non-degenerate example of a symmetric 3×3 supermodular game that has no monotone potential maximizer (MP-maximizer). Since the global-game solution for symmetric 3×3 supermodular games is independent of the noise distribution, this implies that MP-maximizer is not a necessary condition for global-game noise-independent selection.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0304406811000590
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Mathematical Economics.

    Volume (Year): 47 (2011)
    Issue (Month): 6 ()
    Pages: 663-669

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    Handle: RePEc:eee:mateco:v:47:y:2011:i:6:p:663-669

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    Web page: http://www.elsevier.com/locate/jmateco

    Related research

    Keywords: Equilibrium selection; Global games; Supermodular games; Potential games; Monotone potential;

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    1. Gerhard SORGER, 1998. "Perfect Foresight and Equilibrium Selection in Symmetric Potential Games," Vienna Economics Papers 9802, University of Vienna, Department of Economics.
    2. Oyama, Daisuke & Takahashi, Satoru & Hofbauer, Josef, 2003. "Monotone Methods for Equilibrium Selection under Perfect Foresight Dynamics," MPRA Paper 6721, University Library of Munich, Germany.
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    4. Atsushi Kajii & Stephen Morris, 1997. "The Robustness of Equilibria to Incomplete Information," Econometrica, Econometric Society, vol. 65(6), pages 1283-1310, November.
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    11. Goldstein, Itay & Pauzner, Ady, 2004. "Contagion of self-fulfilling financial crises due to diversification of investment portfolios," Journal of Economic Theory, Elsevier, vol. 119(1), pages 151-183, November.
    12. Oyama, Daisuke & Takahashi, Satoru, 2011. "On the relationship between robustness to incomplete information and noise-independent selection in global games," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 683-688.
    13. Giancarlo Corsetti & Amil Dasgupta & Stephen Morris & Hyun Song Shin, 2004. "Does One Soros Make a Difference? A Theory of Currency Crises with Large and Small Traders," Review of Economic Studies, Wiley Blackwell, vol. 71(1), pages 87-113, 01.
    14. Basteck, Christian & Daniëls, Tijmen R. & Heinemann, Frank, 2013. "Characterising equilibrium selection in global games with strategic complementarities," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2620-2637.
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    16. Ui, Takashi, 2001. "Robust Equilibria of Potential Games," Econometrica, Econometric Society, vol. 69(5), pages 1373-80, September.
    17. Stephen Morris & Takashi Ui, 2003. "Generalized Potentials and Robust Sets of Equilibria," Cowles Foundation Discussion Papers 1394, Cowles Foundation for Research in Economics, Yale University.
    18. Itay Goldstein & Ady Pauzner, 2005. "Demand-Deposit Contracts and the Probability of Bank Runs," Journal of Finance, American Finance Association, vol. 60(3), pages 1293-1327, 06.
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    Cited by:
    1. Oyama, Daisuke & Takahashi, Satoru, 2011. "On the relationship between robustness to incomplete information and noise-independent selection in global games," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 683-688.

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