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Independence, Heterogeneity and Uniqueness in Interaction Games

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Author Info
Robin Mason () (University of Southampton)
Akos Valentinyi () (University of Southampton)
Abstract

This paper shows that incomplete information and sufficient heterogeneity of players can ensure uniqueness in interaction games. In contrast to recent work on uniqueness in interaction games, we do not require strategic complementarity. There are two parts to the argument. First, if a player’s signal is sufficiently uninformative of the signals of its opponents (in the sense of the Fisher information of the signal), then the player’s best response to any strategy profile of its opponents is non-decreasing in its signal. Secondly, a contraction mapping argument shows that sufficient heterogeneity ensures that equilibrium is unique.

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Paper provided by Institute of Economics, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 0303.

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Length: 29 pages
Date of creation: May 2003
Date of revision:
Handle: RePEc:has:discpr:0303

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Related research
Keywords: Co-ordination; Interaction games; Heterogeneity; Unique equilibrium;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

References listed on IDEAS
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  1. Burdzy, Krzysztof & Frankel, David M & Pauzner, Ady, 2001. "Fast Equilibrium Selection by Rational Players Living in a Changing World," Econometrica, Econometric Society, vol. 69(1), pages 163-89, January.
    Other versions:
  2. Stephen Morris, . "Interaction Games: A Unified Analysis of Incomplete Information, Local Interaction and Random Matching," Penn CARESS Working Papers 1879bf5487d743edef7f32bb2, Penn Economics Department. [Downloadable!]
    Other versions:
  3. Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-19, June. [Downloadable!] (restricted)
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  4. Athey, Susan, 2001. "Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information," Econometrica, Econometric Society, vol. 69(4), pages 861-89, July.
    Other versions:
  5. Matsuyama, Kiminori, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 617-50, May. [Downloadable!] (restricted)
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  6. Krugman, Paul, 1991. "History versus Expectations," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 651-67, May. [Downloadable!] (restricted)
  7. Carlsson, H. & Van Damme, E., 1990. "Global Games And Equilibrium Selection," Papers 9052, Tilburg - Center for Economic Research.
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  8. Herrendorf, Berthold & Valentinyi, Akos & Waldmann, Robert, 2000. "Ruling Out Multiplicity and Indeterminacy: The Role of Heterogeneity," Review of Economic Studies, Blackwell Publishing, vol. 67(2), pages 295-307, April.
  9. David M. Frankel & Stephen Morris & Ady Pauzner, 2001. "Equilibrium Selection in Global Games with Strategic Complementarities," Cowles Foundation Discussion Papers 1336, Cowles Foundation, Yale University. [Downloadable!]
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  10. Karp, Larry S., 1999. "Fundamentals versus beliefs under almost common knowledge," CUDARE Working Paper Series 871, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy, revised 1999.
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  11. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
    Other versions:
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