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Coordination games and the option to wait

Author

Listed:
  • Andrew Wait

    (University of Sydney)

  • Vladimir Smirnov

    (University of Sydney)

Abstract

We take a coordination game and add the option to wait each player can opt to take an action in the standard game or they can decide to wait. If one player has taken a standard option, the waiting player can adopt their best response to this action. Interpreting the payoff in the final period (when there is no waiting possible) as a outside option or default, we show that a party's equilibrium payoff can be decreasing in their default. Further, a player''s role of leader or follower alternates as the number of waiting periods changes.

Suggested Citation

  • Andrew Wait & Vladimir Smirnov, 2005. "Coordination games and the option to wait," Economics Bulletin, AccessEcon, vol. 3(18), pages 1-4.
    • Handle: RePEc:ebl:ecbull:eb-05c70013
    as

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    File URL: http://www.accessecon.com/pubs/EB/2005/Volume3/EB-05C70013A.pdf
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    References listed on IDEAS

    as
    1. van Damme, E.E.C. & Hurkens, J.P.M., 1998. "Endogenous price leadership," Other publications TiSEM 7036c050-2e61-47ab-9132-2, Tilburg University, School of Economics and Management.
    2. van Damme, Eric & Hurkens, Sjaak, 2004. "Endogenous price leadership," Games and Economic Behavior, Elsevier, vol. 47(2), pages 404-420, May.
    3. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    4. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, July.
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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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