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Observing actions in global games

Author

Listed:
  • Dominik Grafenhofer

    (Deutsche Telekom)

  • Wolfgang Kuhle

    (Corvinus University
    MEA, Max Planck Institute for Social Law and Social Policy
    VSE)

Abstract

We study Bayesian coordination games where agents receive noisy private information over the game’s payoffs, and over each others’ actions. If private information over actions is of low quality, equilibrium uniqueness obtains in a manner similar to a global games setting. On the contrary, if private information over actions (and thus over the game’s payoff coefficient) is precise, agents can coordinate on multiple equilibria. We argue that our results apply to phenomena such as bank-runs, currency crises, recessions, or riots and revolutions, where agents monitor each other closely.

Suggested Citation

  • Dominik Grafenhofer & Wolfgang Kuhle, 2022. "Observing actions in global games," SN Business & Economics, Springer, vol. 2(12), pages 1-15, December.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:12:d:10.1007_s43546-022-00362-8
    DOI: 10.1007/s43546-022-00362-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Coordination games; Global games; Conjectural equilibrium;
    All these keywords.

    JEL classification:

    • 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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