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Regime Change in Large Information Networks

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  • Joan de Martí
  • Pau Milán

Abstract

We study global games of regime change within networks of truthful communication. Agents can choose between attacking and not attacking a status quo, whose strength is unknown. Players share private signals on this state of the world with their immediate neighbors. Communication with neighboring players introduces local correlations in posterior beliefs and also allows for the pooling of information. In order to isolate the latter effect, we provide, as a methodological contribution, sparseness conditions on networks that allow for asymptotic approximations that eliminate covariances from equilibrium strategies. We ask how changes in the distribution of connectivities in the population affect the types of coordination in equilibrium as well as the likelihood of successful rally. We find that without a public signal strategic incentives align, and the probability of success remains independent of the type of network. With a public signal the distribution of degrees unambiguously affects the probability of success, although the direction of change is not monotone, and depends crucially on the cost of attack.

Suggested Citation

  • Joan de Martí & Pau Milán, 2018. "Regime Change in Large Information Networks," Working Papers 1049, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:1049
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    References listed on IDEAS

    as
    1. Jeanne Hagenbach & Frédéric Koessler, 2010. "Strategic Communication Networks," Review of Economic Studies, Oxford University Press, vol. 77(3), pages 1072-1099.
    2. Iachan, Felipe S. & Nenov, Plamen T., 2015. "Information quality and crises in regime-change games," Journal of Economic Theory, Elsevier, vol. 158(PB), pages 739-768.
    3. József Sákovics & Jakub Steiner, 2012. "Who Matters in Coordination Problems?," American Economic Review, American Economic Association, vol. 102(7), pages 3439-3461, December.
    4. Guimaraes, Bernardo & Morris, Stephen, 2007. "Risk and wealth in a model of self-fulfilling currency attacks," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2205-2230, November.
    5. Szkup, Michal & Trevino, Isabel, 2015. "Information acquisition in global games of regime change," Journal of Economic Theory, Elsevier, vol. 160(C), pages 387-428.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    global games; Networks; regime change; revolutions; communication;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • 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
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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