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Preopening and equilibrium selection

Listed author(s):
  • Lovo, Stefano

    ()

  • Calcagno, Ricardo

    ()

In this paper, the authors introduce a form of pre-play communication that we call "preopening". During the preopening, players announce their tentative actions to be played in the underlying game. Announcements are made using a posting system which is subject to stochastic failures. Posted actions are publicly observable and players payo¤s only depend on the opening outcome, i.e. the action pro…le that is posted at the end of the preopening phase. We show that when the posting failures hit players idiosyncratically all equilibria of the preopening game lead to the same opening outcome that corresponds to the most "sensible" pure Nash equilibrium of the underlying game. By contrast preopening does not operate an equilibrium selection when posting failure hits players simultaneously.

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Paper provided by HEC Paris in its series Les Cahiers de Recherche with number 927.

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Length: 51 pages
Date of creation: 16 Feb 2010
Handle: RePEc:ebg:heccah:0927
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  1. Biais, Bruno & Bisière, Christophe & Pouget, Sébastien, 2009. "Equilibrium Discovery and Preopening Mechanisms in an Experimental Market," IDEI Working Papers 543, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Banerjee, Abhijit & Weibull, Jorgen W., 2000. "Neutrally Stable Outcomes in Cheap-Talk Coordination Games," Games and Economic Behavior, Elsevier, vol. 32(1), pages 1-24, July.
  3. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  4. Vincent P Crawford, 2007. "Let’s Talk It Over: Coordination Via Preplay Communication With Level-k Thinking," Levine's Bibliography 122247000000001449, UCLA Department of Economics.
  5. van Damme, E.E.C. & Hurkens, J.P.M., 1993. "Commitment robust equilibria and endogenous timing," Discussion Paper 1993-56, Tilburg University, Center for Economic Research.
  6. Rabin, Matthew, 1991. "A Model of Pre-Game Communication," Department of Economics, Working Paper Series qt902697n7, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  7. Robert J. Aumann & Sergiu Hart, 2003. "Long Cheap Talk," Econometrica, Econometric Society, vol. 71(6), pages 1619-1660, November.
    • Robert J. Aumann & Sergiu Hart, 2002. "Long Cheap Talk," Discussion Paper Series dp284, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem, revised Nov 2002.
  8. Guillermo Caruana & Liran Einav, 2008. "A Theory of Endogenous Commitment," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 99-116.
  9. Crawford, Vincent P, 1995. "Adaptive Dynamics in Coordination Games," Econometrica, Econometric Society, vol. 63(1), pages 103-143, January.
  10. Joseph Farrell, 1987. "Cheap Talk, Coordination, and Entry," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 34-39, Spring.
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