Advanced Search
MyIDEAS: Login to save this paper or follow this series

Efficient Dynamic Coordination with Individual Learning

Contents:

Author Info

  • Amil Dasgupta
  • Jakub Steiner
  • Colin Stewart

Abstract

We study how the presence of multiple participation opportunities coupled with private learning about payoffs affects the ability of agents to coordinate efficiently in global coordination games. Two players face the option to invest irreversibly in a project in one of many rounds. The project succeeds if some underlying state variable q is positive and both players invest, possibly asynchronously. In each round they receive informative private signals about q, and asymptotically learn the true value of q. Players choose in each period whether to invest or to wait for more precise information about q. We show that with sufficiently many rounds, both players invest with arbitrarily high probability whenever investment is socially efficient. This result stands in sharp contrast to the usual static global game outcome in which players coordinate on the risk-dominant action. We provide a foundation for these results in terms of higher order beliefs.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.utoronto.ca/public/workingPapers/tecipa-301.pdf
File Function: Main Text
Download Restriction: no

Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-301.

as in new window
Length: 25 pages
Date of creation: 07 Nov 2007
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-301

Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283

Related research

Keywords: Coordination; global games; efficiency; dynamic games; higher-order beliefs;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1275, Cowles Foundation for Research in Economics, Yale University.
  2. Morris, Stephen & Shin, Hyun Song, 1998. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," American Economic Review, American Economic Association, American Economic Association, vol. 88(3), pages 587-97, June.
  3. Paul Heidhues & Nicolas Melissas, 2003. "Equilibria in a Dynamic Global Game: The Role of Cohort Effects," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) SP II 2003-08, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  4. 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.
  5. Morris, Stephen & Rob, Rafael & Shin, Hyun Song, 1995. "Dominance and Belief Potential," Econometrica, Econometric Society, Econometric Society, vol. 63(1), pages 145-57, January.
  6. Martin W. Cripps & Jeffrey C. Ely & George J. Mailath & Larry Samuelson, 2007. "Common Learning," PIER Working Paper Archive 07-018, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262582384, December.
  8. Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, Elsevier, vol. 1(2), pages 170-190, June.
  9. Carlsson, H. & Van Damme, E., 1990. "Global Games And Equilibrium Selection," Papers, Tilburg - Center for Economic Research 9052, Tilburg - Center for Economic Research.
  10. Goldstein, Itay & Pauzner, Ady, 2004. "Contagion of self-fulfilling financial crises due to diversification of investment portfolios," Journal of Economic Theory, Elsevier, Elsevier, vol. 119(1), pages 151-183, November.
  11. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2007. "Dynamic Global Games of Regime Change: Learning, Multiplicity, and the Timing of Attacks," Econometrica, Econometric Society, Econometric Society, vol. 75(3), pages 711-756, 05.
  12. Atsushi Kajii & Stephen Morris, . "The Robustness of Equilibria to Incomplete Information," Penn CARESS Working Papers, Penn Economics Department ed504c985fc375cbe719b3f60, Penn Economics Department.
  13. Stephen Morris & Hyun Song Shin, 2007. "Common Belief Foundations of Global Games," Levine's Bibliography 122247000000001638, UCLA Department of Economics.
  14. Amil Dasgupta, 2004. "Financial Contagion Through Capital Connections: A Model of the Origin and Spread of Bank Panics," Journal of the European Economic Association, MIT Press, MIT Press, vol. 2(6), pages 1049-1084, December.
  15. Christophe Chamley, 2003. "Dynamic Speculative Attacks," American Economic Review, American Economic Association, American Economic Association, vol. 93(3), pages 603-621, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Sylvain Chassang & Gerard PadrĂ³ 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. John Duffy, 2009. "Equilibrium Selection in Static and Dynamic Entry Games," Working Papers, University of Pittsburgh, Department of Economics 376, University of Pittsburgh, Department of Economics, revised Dec 2011.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:tecipa-301. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.