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Coordination in a Mobile World

  • Jakub Steiner

We study coordination failures in many simultaneously occurring coordination problems called projects. Players encounter one of these projects, but have an outside option to search for another of the projects. Drawing on the global games approach, we show that such a mobile game has a unique equilibrium which allows us to examine comparative statics. The endogeneity of the outside option value and of the search activity leads to non-monotonicity of welfare with respect to search costs; high mobility may hurt players. Moreover, outcomes of the mobile game are remarkably robust to changes in the exogenous parameters. In contrast to the “static” benchmark global game without a search option, successful coordination is frequent in the mobile game even for extremely poor distributions of economic fundamentals, and coordination failures are common even for extremely good distributions. The strategic consequences of the search option are robust to various modifications of the model.

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Paper provided by The Center for Economic Research and Graduate Education - Economics Institute, Prague in its series CERGE-EI Working Papers with number wp295.

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Date of creation: Apr 2006
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Handle: RePEc:cer:papers:wp295
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  1. Morris, Stephen & Shin, Hyun Song, 1997. "Unique Equilibrium in a Model of Self-fulfilling Currency Attacks," CEPR Discussion Papers 1687, C.E.P.R. Discussion Papers.
  2. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  3. Jakub Steiner, 2005. "Coordination Cycles," CERGE-EI Working Papers wp274, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  4. Hyun Shin, 2001. "Coordination Risk and the Price of Debt," Economics Series Working Papers 1999-W25, University of Oxford, Department of Economics.
  5. Byeongju Jeong, 2003. "The Welfare Effects of Mobility Restrictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 685-696, July.
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  8. Jakub Steiner, 2006. "Coordination of Mobile Labor," ESE Discussion Papers 152, Edinburgh School of Economics, University of Edinburgh.
  9. Carlsson, H. & van Damme, E.E.C., 1990. "Global games and equilibrium selection," Discussion Paper 1990-52, Tilburg University, Center for Economic Research.
  10. George J. Mailath & Larry Samuelson & Avner Shaked, 1997. "Endogenous Interactions," CARESS Working Papres endo-one, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  11. Oechssler, Jorg, 1997. "Decentralization and the coordination problem," Journal of Economic Behavior & Organization, Elsevier, vol. 32(1), pages 119-135, January.
  12. Matsuyama, Kiminori, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 617-50, May.
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  15. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2004. "Information Dynamics and Equilibrium Multiplicity in Global Games of Regime Change," NBER Working Papers 11017, National Bureau of Economic Research, Inc.
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