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Improving Nash by coarse correlation

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

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.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 150 (2014)
Issue (Month): C ()
Pages: 852-865

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Handle: RePEc:eee:jetheo:v:150:y:2014:i:c:p:852-865
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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