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Pre-communication in a coordination game with incomplete information

Author

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  • Zhuozheng Li

    (Shanghai University of Finance and Economics)

  • Huanxing Yang

    (Ohio State University)

  • Lan Zhang

    (Southwestern University of Finance and Economics)

Abstract

We study several pre-communication protocols in a coordination game with incomplete information. Under decentralized decision making, we show that informative communication can be sustained in equilibrium, yet miscoordination arises with positive probabilities. Moreover, the equilibrium takes a partitional structure and messages are rank ordered, with higher messages becoming increasingly imprecise. Compared to centralized decision making (a mediator without commitment), decentralization leads to more informative communication when the miscoordination cost is high, and performs better when the miscoordination cost is intermediate. We also study the case in which the mediator is able to commit to a decision rule beforehand.

Suggested Citation

  • Zhuozheng Li & Huanxing Yang & Lan Zhang, 2019. "Pre-communication in a coordination game with incomplete information," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(1), pages 109-141, March.
    • Handle: RePEc:spr:jogath:v:48:y:2019:i:1:d:10.1007_s00182-018-0637-7
    DOI: 10.1007/s00182-018-0637-7
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Cheap talk; Coordination game; Centralization; Decentralization;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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