Coordination with sequential information acquisition

We investigate how differences in initial beliefs and sequential information choices affect the likelihood of coordination failure. To do so, we embed interim information acquisition (i.e., information acquisition after observing initial private information) into a standard global game mode with a normal information structure and improper prior. We find that the likelihood of coordination on welfare-inferior equilibrium is invariant to precision, cost, and availability of information. We show that agents’ information choices feature two-sided inefficiency where too many agents with high posteriors and too few agents with low posteriors acquire information. Instead, under efficient information choices, the likelihood of coordination failure vanishes as the number of signals that agents can acquire tends to infinity. Unfortunately, efficient information choices are not implementable unless policymakers can observe agents’ private information.