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Preopening and equilibrium selection

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Author Info

  • Lovo, Stefano

    ()

  • Calcagno, Ricardo

    ()

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    Abstract

    In this paper, the authors 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 payo¤s only depend on the opening outcome, i.e. the action pro…le 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 HEC Paris in its series Les Cahiers de Recherche with number 927.

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    Length: 51 pages
    Date of creation: 16 Feb 2010
    Date of revision:
    Handle: RePEc:ebg:heccah:0927

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    Postal: HEC Paris, 78351 Jouy-en-Josas cedex, France
    Web page: http://www.hec.fr/
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    Related research

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

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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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