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The role of large players in global games with strategic complements and substitutes

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  • Lee, Kyounghun
  • Oh, Frederick Dongchuhl

Abstract

This study analyzes global games with strategic complements and substitutes where a large player influences the behavior of small players. Specifically, we examine the protest decision of a group of citizens, which consists of a large civic group and small groups of citizens. They decide whether to participate in a protest against a government based on their private information about the government’s strength. Protest participation features strategic complementarity since the protest is more likely to succeed as more citizens participate in it, while it also features strategic substitutability since a larger protest leads to a higher probability of a government crackdown. Our model demonstrates that the presence of the large civic group affects the outcome of the protest. Moreover, we find a non-monotonic relationship between the probability of protest success and the size of the large civic group, as opposed to when protest participation exhibits only strategic complementarities.

Suggested Citation

  • Lee, Kyounghun & Oh, Frederick Dongchuhl, 2021. "The role of large players in global games with strategic complements and substitutes," Economics Letters, Elsevier, vol. 198(C).
    • Handle: RePEc:eee:ecolet:v:198:y:2021:i:c:s0165176520304481
    DOI: 10.1016/j.econlet.2020.109688
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    Cited by:

    1. Oh, Frederick Dongchuhl & Park, Junghum, 2023. "A large creditor in contagious liquidity crises," Journal of Banking & Finance, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    Protest game; Global game; Strategic complements; Strategic substitutes; Large player;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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