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Preopening and Equilibrium Selection

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Author Info

  • Riccardo Calcagno

    (VU University Amsterdam)

  • Stefano Lovo

    (HEC, France)

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    Abstract

    We introduce a form of pre-play communication that we call "preopening". During the preopening, players announce their tentative actions to be played in the underlying game. Announcements are made using a posting system which is subject to stochastic failures. Posted actions are publicly observable and players payoffs only depend on the opening outcome, i.e. the action profile that is posted at the end of the preopening phase. We show that when the posting failures hit players idiosyncratically all equilibria of the preopening game lead to the same opening outcome that corresponds to the most "sensible" pure Nash equilibrium of the underlying game. By contrast preopening does not operate an equilibrium selection when posting failure hits players simultaneously.

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    Bibliographic Info

    Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 10-023/2.

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    Date of creation: 22 Feb 2010
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    Handle: RePEc:dgr:uvatin:20100023

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    Web page: http://www.tinbergen.nl

    Related research

    Keywords: Preopening; equilibrium selection; bargaining; cheap talk;

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    References

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    1. Van Damme, E. & Hurkens, S., 1993. "Commitment Robust Equilibria and Endogenous Timing," Papers 9356, Tilburg - Center for Economic Research.
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    Cited by:
    1. Dutta, Prajit K., 2012. "Coordination need not be a problem," Games and Economic Behavior, Elsevier, vol. 76(2), pages 519-534.

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