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Announcement wars as an equilibrium selection device

Author

Listed:
  • ACOCELLA, Nicola

    () (Sapienza University of Rome, Department of Geo-economics, I-00161 Rome, Italy)

  • DI BARTOLOMEO, Giovanni

    () (University of Teramo, Faculty of Communication, I-64100 Teramo, Italy)

  • HUGHES HALLETT, Andrew

    () (School of Public Policy, George Mason University, Fairfax, VA, USA)

  • PIACQUADIO, Paolo G.

    () (Université catholique de Louvain, CORE and IRES, B-1348 Louvain-la-Neuve, Belgium)

Abstract

This paper attempts to give a rationale to public announcements, so often observed in the real world, and to formalize the idea that they can be used as a form of equilibrium selection device when multiple equilibria arise. It also shows how announcements solve the problems of coordination failures as predicted by the empirical literature based on experimental studies

Suggested Citation

  • ACOCELLA, Nicola & DI BARTOLOMEO, Giovanni & HUGHES HALLETT, Andrew & PIACQUADIO, Paolo G., 2009. "Announcement wars as an equilibrium selection device," CORE Discussion Papers 2009077, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2009077
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    File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2009_77web.pdf
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    Citations

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    Cited by:

    1. Di Bartolomeo Giovanni & Hughes Hallett Andrew & Acocella Nicola, 2013. "When Can Policy Makers Anchor Expectations? Dynamic controllability and the limits to time inconsistency," wp.comunite 0104, Department of Communication, University of Teramo.
    2. Hughes Hallett, Andrew & Di Bartolomeo, Giovanni & Acocella, Nicola, 2012. "A general theory of controllability and expectations anchoring for small-open economies," Journal of International Money and Finance, Elsevier, vol. 31(2), pages 397-411.
    3. Sergey Pekarski, 2017. "Tight Money and the Sustainability of Public Debt," International Journal of Central Banking, International Journal of Central Banking, vol. 13(1), pages 191-223, February.

    More about this item

    Keywords

    multiple Nash equilibria; coordination failure; cheap talk; policy games; announcement equilibrium;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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