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Information acquisition in global games of regime change

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  • Szkup, Michal
  • Trevino, Isabel

Abstract

We study costly information acquisition in global games of regime change (that is, coordination games where payoffs are discontinuous in the unobserved state and in the agents' average action). We show that only symmetric equilibria exist and provide sufficient conditions for uniqueness. We then characterize the value of information in these games and link it to the underlying parameters of the model. We investigate equilibrium efficiency, complementarities in information choices, and the trade-offs between public and private information. We show that information acquisition can be inefficient and that strategic complementarities in actions do not always translate into strategic complementarities in information acquisition. Finally, we find that public and private information can be complements. These results contrast findings in linear-quadratic models, where payoffs depend continuously on both the unobserved state and the agents' average action.

Suggested Citation

  • Szkup, Michal & Trevino, Isabel, 2015. "Information acquisition in global games of regime change," Journal of Economic Theory, Elsevier, vol. 160(C), pages 387-428.
  • Handle: RePEc:eee:jetheo:v:160:y:2015:i:c:p:387-428
    DOI: 10.1016/j.jet.2015.10.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Stephen Morris & Ming Yang, 2016. "Coordination and Continuous Choice," Working Papers 087_2017, Princeton University, Department of Economics, Econometric Research Program..
    2. repec:kap:enreec:v:73:y:2019:i:4:d:10.1007_s10640-018-0299-8 is not listed on IDEAS
    3. repec:kap:expeco:v:21:y:2018:i:3:d:10.1007_s10683-018-9577-0 is not listed on IDEAS
    4. George-Marios Angeletos & Chen Lian, 2016. "Incomplete Information in Macroeconomics: Accommodating Frictions in Coordination," NBER Working Papers 22297, National Bureau of Economic Research, Inc.
    5. Szkup, Michal, 2017. "Multiplier effect and comparative statics in global games of regime change," MPRA Paper 82729, University Library of Munich, Germany.
    6. repec:eee:gamebe:v:113:y:2019:i:c:p:262-284 is not listed on IDEAS
    7. Stephen Morris & Ming Yang, 2016. "Coordination and the Relative Cost of Distinguishing Nearby States," Working Papers 079_2016, Princeton University, Department of Economics, Econometric Research Program..
    8. Joan de Martí & Pau Milán, 2018. "Regime Change in Large Information Networks," Working Papers 1049, Barcelona Graduate School of Economics.

    More about this item

    Keywords

    Global games; Information acquisition; Coordination; Value of information;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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