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Iterated generalized half-dominance and global game selection

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  • Iijima, Ryota

Abstract

We offer an equilibrium characterization of a general class of global games with strategic complementarities. The analysis highlights a form of acyclicity in the interim belief structure of global games, which allows us to formalize a selection criterion, iterated generalized half-dominance. This criterion is shown to be a unique global game selection when noise distributions satisfy a regularity condition. A similar logic also applies to the perfect foresight dynamics of Matsui and Matsuyama (1995); an iterated generalized half-dominant equilibrium is a unique globally stable state when agents are patient enough. The criterion is especially useful for games with more than two asymmetric players, and can be easily applied to local interaction games with an arbitrary network structure.

Suggested Citation

  • Iijima, Ryota, 2015. "Iterated generalized half-dominance and global game selection," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 120-136.
  • Handle: RePEc:eee:jetheo:v:159:y:2015:i:pa:p:120-136
    DOI: 10.1016/j.jet.2015.05.013
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    References listed on IDEAS

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    More about this item

    Keywords

    Equilibrium selection; Global games; Perfect foresight dynamics; Networks; Asymmetric games;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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