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Coordination need not be a problem

  • Dutta, Prajit K.
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    In a game of common interest there is one action vector that all players prefer to every other. Yet there may be multiple Pareto-ranked Nash equilibria in the game and the “coordination problem” refers to the fact that rational equilibrium play cannot rule out Pareto-dominated equilibria. In this paper, I prove that two elements — asynchronicity and a finite horizon — are sufficient to uniquely select the Pareto-dominant action vector (in subgame perfect equilibrium play). Asynchronicity may be exogenously specified by the rules of the game. Alternatively, in a game where players choose when to move, asynchronicity may emerge as an equilibrium move outcome.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0899825612000966
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    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 76 (2012)
    Issue (Month): 2 ()
    Pages: 519-534

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    Handle: RePEc:eee:gamebe:v:76:y:2012:i:2:p:519-534
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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