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Coordination in a Mobile World

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  • Jakub Steiner

Abstract

We study coordination failures in many simultaneously occurring coordination problems called projects. Players encounter one of these projects, but have an outside option to search for another of the projects. Drawing on the global games approach, we show that such a mobile game has a unique equilibrium which allows us to examine comparative statics. The endogeneity of the outside option value and of the search activity leads to non-monotonicity of welfare with respect to search costs; high mobility may hurt players. Moreover, outcomes of the mobile game are remarkably robust to changes in the exogenous parameters. In contrast to the “static” benchmark global game without a search option, successful coordination is frequent in the mobile game even for extremely poor distributions of economic fundamentals, and coordination failures are common even for extremely good distributions. The strategic consequences of the search option are robust to various modifications of the model.

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Bibliographic Info

Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp295.

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Date of creation: Apr 2006
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Handle: RePEc:cer:papers:wp295

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Keywords: Coordination; Equilibrium Uniqueness; Global Games; Search; Mobility; Globalization;

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References

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  1. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  2. Steiner, Jakub, 2008. "Coordination of mobile labor," Journal of Economic Theory, Elsevier, Elsevier, vol. 139(1), pages 25-46, March.
  3. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2004. "Information Dynamics and Equilibrium Multiplicity in Global Games of Regime Change," NBER Working Papers 11017, National Bureau of Economic Research, Inc.
  4. Stephen Morris & Hyun Song Shin, 1999. "Coordination Risk and the Price of Debt," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1241, Cowles Foundation for Research in Economics, Yale University.
  5. Jakub Steiner, 2005. "Coordination Cycles," CERGE-EI Working Papers, The Center for Economic Research and Graduate Education - Economic Institute, Prague wp274, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  6. Oechssler, Jorg, 1997. "Decentralization and the coordination problem," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 32(1), pages 119-135, January.
  7. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  8. Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Hans Carlsson & Eric van Damme, 1993. "Global Games and Equilibrium Selection," Levine's Working Paper Archive 122247000000001088, David K. Levine.
  10. Itay Goldstein & Ady Pauzner, 2005. "Demand-Deposit Contracts and the Probability of Bank Runs," Journal of Finance, American Finance Association, American Finance Association, vol. 60(3), pages 1293-1327, 06.
  11. Jakub Steiner, 2006. "Coordination in a Mobile World," CERGE-EI Working Papers, The Center for Economic Research and Graduate Education - Economic Institute, Prague wp295, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  12. George J. Mailath & Larry Samuelson & Avner Shaked, 1997. "Endogenous Interactions," CARESS Working Papres, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences endo-one, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  13. Burdett Kenneth & Imai Ryoichi & Wright Randall, 2004. "Unstable Relationships," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 1(1), pages 1-44, January.
  14. Frank Heinemann & Rosemarie Nagel & Peter Ockenfels, 2004. "The Theory of Global Games on Test: Experimental Analysis of Coordination Games with Public and Private Information," Econometrica, Econometric Society, Econometric Society, vol. 72(5), pages 1583-1599, 09.
  15. Morris, S & Song Shin, H, 1996. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," Economics Papers 126, Economics Group, Nuffield College, University of Oxford.
  16. Byeongju Jeong, 2003. "The Welfare Effects of Mobility Restrictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 685-696, July.
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Citations

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Cited by:
  1. Sylvain Chassang & Gerard Padró i Miquel, 2010. "Conflict and Deterrence under Strategic Risk," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(4), pages 1821-1858, November.
  2. Dasgupta, Amil, 2007. "Coordination and delay in global games," Journal of Economic Theory, Elsevier, Elsevier, vol. 134(1), pages 195-225, May.
  3. Jakub Steiner, 2006. "Coordination of Mobile Labor," ESE Discussion Papers, Edinburgh School of Economics, University of Edinburgh 152, Edinburgh School of Economics, University of Edinburgh.
  4. Flavio Toxvaerd & Chryssi Giannitsarou, 2004. "Recursive global games," Money Macro and Finance (MMF) Research Group Conference 2003, Money Macro and Finance Research Group 104, Money Macro and Finance Research Group.
  5. Junichi Fujimoto, 2011. "Speculative Attacks with Multiple Targets," CARF F-Series, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo CARF-F-267, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  6. Jakub Steiner & Colin Stewart, 2010. "Influential Opinion Leaders," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1485, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Jakub Steiner & Laurent Mathevet, 2012. "Sand in the Wheels: A Dynamic Global-Game Approach," 2012 Meeting Papers, Society for Economic Dynamics 123, Society for Economic Dynamics.
  8. Junichi Fujimoto, 2014. "Speculative Attacks with Multiple Targets," CARF F-Series, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo CARF-F-340, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  9. Peter R. Mueser & David Mandy & Eric Parsons, 2011. "Population Population Movements in the Presence of Agglomeration and Congestion Effects: Local Policy and the Social Optimum," Working Papers, Department of Economics, University of Missouri 1123, Department of Economics, University of Missouri.

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