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Intertemporal coordination with delay options

Listed author(s):
  • Araujo, Luis
  • Guimaraes, Bernardo

This paper studies equilibrium selection in intertemporal coordination problems with delay options. The risk-dominant action of the underlying one-shot game is selected when frictions are arbitrarily small. Larger frictions introduce real option effects in the model and inhibit coordination.

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File URL: http://www.sciencedirect.com/science/article/pii/S0022053115000411
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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 157 (2015)
Issue (Month): C ()
Pages: 793-810

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Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:793-810
DOI: 10.1016/j.jet.2015.02.008
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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