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The Welfare Effects of Policy Signalling in a Regime Change Game

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  • Georgy Lukyanov

Abstract

We explore a specific parametric example of a regime change game in which a policymaker defends the status quo against a continuum of atomistic agents who seek to overthrow it. At the start of the game, the policymaker can initiate a policy intervention to make an attack less appealing. When agents' private information is relatively imprecise, signalling is beneficial to the policymaker when the fundamentals are strong but detrimental when the fundamentals are weak.

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  • Georgy Lukyanov, 2025. "The Welfare Effects of Policy Signalling in a Regime Change Game," Papers 2509.04750, arXiv.org.
    • Handle: RePEc:arx:papers:2509.04750
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    1. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September.
    2. , & ,, 2013. "Selection-free predictions in global games with endogenous information and multiple equilibria," Theoretical Economics, Econometric Society, vol. 8(3), September.
    3. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2006. "Signaling in a Global Game: Coordination and Policy Traps," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 452-484, June.
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