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Improving Nash by coarse correlation

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  • Moulin, Herve
  • Ray, Indrajit
  • Sen Gupta, Sonali

Abstract

We consider a class of symmetric two-person quadratic games where coarse correlated equilibria – CCE – (Moulin and Vial [16]) can strictly improve upon the Nash equilibrium payoffs, while correlated equilibrium – CE – (Aumann [3,4]) cannot, because these games are potential games with concave potential functions. We compute the largest feasible total utility in any CCE in those games and show that it is achieved by a CCE involving only two pure strategy profiles. Applications include the Cournot duopoly and the game of public good provision, where the improvement over and above the Nash equilibrium payoff can be substantial.

Suggested Citation

  • Moulin, Herve & Ray, Indrajit & Sen Gupta, Sonali, 2014. "Improving Nash by coarse correlation," Journal of Economic Theory, Elsevier, vol. 150(C), pages 852-865.
  • Handle: RePEc:eee:jetheo:v:150:y:2014:i:c:p:852-865
    DOI: 10.1016/j.jet.2013.10.008
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    Cited by:

    1. Herve Moulin & Indrajit Ray & Sonali Sen Gupta, 2013. "Coarse Correlated Equilibria in an Abatement Game," Discussion Papers 13-11, Department of Economics, University of Birmingham.
    2. Konstantinos Georgalos & Indrajit Ray & Sonali Sen Gupta, 2017. "Coarse correlation and coordination in a game," Working Papers 151235570, Lancaster University Management School, Economics Department.

    More about this item

    Keywords

    Coarse correlated equilibrium; Quadratic games; Duopoly models; Public good;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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