IDEAS home Printed from https://ideas.repec.org/a/spr/snbeco/v2y2022i12d10.1007_s43546-022-00362-8.html
   My bibliography  Save this article

Observing actions in global games

Author

Listed:
  • Dominik Grafenhofer

    (Deutsche Telekom)

  • Wolfgang Kuhle

    (Corvinus University
    MEA, Max Planck Institute for Social Law and Social Policy
    VSE)

Abstract

We study Bayesian coordination games where agents receive noisy private information over the game’s payoffs, and over each others’ actions. If private information over actions is of low quality, equilibrium uniqueness obtains in a manner similar to a global games setting. On the contrary, if private information over actions (and thus over the game’s payoff coefficient) is precise, agents can coordinate on multiple equilibria. We argue that our results apply to phenomena such as bank-runs, currency crises, recessions, or riots and revolutions, where agents monitor each other closely.

Suggested Citation

  • Dominik Grafenhofer & Wolfgang Kuhle, 2022. "Observing actions in global games," SN Business & Economics, Springer, vol. 2(12), pages 1-15, December.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:12:d:10.1007_s43546-022-00362-8
    DOI: 10.1007/s43546-022-00362-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43546-022-00362-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43546-022-00362-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rubinstein Ariel & Wolinsky Asher, 1994. "Rationalizable Conjectural Equilibrium: Between Nash and Rationalizability," Games and Economic Behavior, Elsevier, vol. 6(2), pages 299-311, March.
    2. Bergemann, Dirk & Morris, Stephen, 2016. "Bayes correlated equilibrium and the comparison of information structures in games," Theoretical Economics, Econometric Society, vol. 11(2), May.
    3. Grafenhofer, Dominik & Kuhle, Wolfgang, 2016. "Observing each other’s observations in a Bayesian coordination game," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 10-17.
    4. Morris, Stephen & Shin, Hyun Song, 1998. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," American Economic Review, American Economic Association, vol. 88(3), pages 587-597, June.
    5. Kováč, Eugen & Steiner, Jakub, 2013. "Reversibility in dynamic coordination problems," Games and Economic Behavior, Elsevier, vol. 77(1), pages 298-320.
    6. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September.
    7. Iván Werning & George-Marios Angeletos, 2006. "Crises and Prices: Information Aggregation, Multiplicity, and Volatility," American Economic Review, American Economic Association, vol. 96(5), pages 1720-1736, December.
    8. repec:bla:scandj:v:79:y:1977:i:2:p:210-26 is not listed on IDEAS
    9. Frankel, David M., 2012. "Recurrent crises in global games," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 309-321.
    10. Christophe Chamley, 1999. "Coordinating Regime Switches," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 869-905.
    11. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2007. "Dynamic Global Games of Regime Change: Learning, Multiplicity, and the Timing of Attacks," Econometrica, Econometric Society, vol. 75(3), pages 711-756, May.
    12. Morris, Stephen & Shin, Hyun Song, 2004. "Coordination risk and the price of debt," European Economic Review, Elsevier, vol. 48(1), pages 133-153, February.
    13. Steiner, Jakub & Stewart, Colin, 2011. "Communication, timing, and common learning," Journal of Economic Theory, Elsevier, vol. 146(1), pages 230-247, January.
    14. Binmore, Ken & Samuelson, Larry, 2001. "Coordinated Action in the Electronic Mail Game," Games and Economic Behavior, Elsevier, vol. 35(1-2), pages 6-30, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wolfgang Kuhle, 2024. "Games with Planned Actions and Scouting," Papers 2408.09778, arXiv.org.
    2. Wolfgang Kuhle, 2024. "The inflation game," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 53(1), February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dominik Grafenhofer & Wolfgang Kuhle, 2021. "Observing Actions in Global Games," Papers 2111.10554, arXiv.org.
    2. Dominik Grafenhofer & Wolfgang Kuhle, 2019. "Observing Actions in Bayesian Games," Papers 1904.10744, arXiv.org.
    3. Wolfgang Kuhle, 2024. "Games with Planned Actions and Scouting," Papers 2408.09778, arXiv.org.
    4. Angeletos, G.-M. & Lian, C., 2016. "Incomplete Information in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1065-1240, Elsevier.
    5. Kováč, Eugen & Steiner, Jakub, 2013. "Reversibility in dynamic coordination problems," Games and Economic Behavior, Elsevier, vol. 77(1), pages 298-320.
    6. Frankel, David M., 2017. "Efficient ex-ante stabilization of firms," Journal of Economic Theory, Elsevier, vol. 170(C), pages 112-144.
    7. Pavan, Alessandro & Vives, Xavier, 2015. "Information, Coordination, and Market Frictions: An Introduction," Journal of Economic Theory, Elsevier, vol. 158(PB), pages 407-426.
    8. Olga Shurchkov, 2013. "Coordination and learning in dynamic global games: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 313-334, September.
    9. Laurent Mathevet & Jakub Steiner, 2012. "Sand in the Wheels: A Dynamic Global-Game Approach," CERGE-EI Working Papers wp459, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    10. Szkup, Michal & Trevino, Isabel, 2015. "Information acquisition in global games of regime change," Journal of Economic Theory, Elsevier, vol. 160(C), pages 387-428.
    11. Campos, Rodolfo G., 2013. "Risk-sharing and crises. Global games of regime change with endogenous wealth," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1624-1658.
    12. repec:hal:cepnwp:hal-01117929 is not listed on IDEAS
    13. Ernesto Pasten & Yang K. Lu, 2010. "Coordination of Expectations and the Informational Role of Policy," 2010 Meeting Papers 985, Society for Economic Dynamics.
    14. Szkup, Michal, 2020. "Multiplier effect and comparative statics in global games of regime change," Theoretical Economics, Econometric Society, vol. 15(2), May.
    15. Jakub Steiner & Eugen Kovac, 2008. "Learning Options in Coordination Problems," 2008 Meeting Papers 848, Society for Economic Dynamics.
    16. Toni Ahnert & Ali Kakhbod, 2017. "Information Choice and Amplification of Financial Crises," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 2130-2178.
    17. Brindisi, Francesco & Çelen, Boğaçhan & Hyndman, Kyle, 2014. "The effect of endogenous timing on coordination under asymmetric information: An experimental study," Games and Economic Behavior, Elsevier, vol. 86(C), pages 264-281.
    18. Grafenhofer, Dominik & Kuhle, Wolfgang, 2016. "Observing each other’s observations in a Bayesian coordination game," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 10-17.
    19. Shurchkov, Olga, 2016. "Public announcements and coordination in dynamic global games: Experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 61(C), pages 20-30.
    20. Damien Besancenot & Radu Vranceanu, 2015. "Fear Of Novelty: A Model Of Scientific Discovery With Strategic Uncertainty," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1132-1139, April.
    21. Edmond, Chris, 2018. "Non-Laplacian beliefs in a global game with noisy signaling," Research in Economics, Elsevier, vol. 72(2), pages 297-312.

    More about this item

    Keywords

    Coordination games; Global games; Conjectural equilibrium;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:snbeco:v:2:y:2022:i:12:d:10.1007_s43546-022-00362-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.