The effect of options on coordination
This paper studies how constraints on the timing of actions affect equilibrium in intertemporal coordination problems. The model exhibits a unique symmetric equilibrium in cut-o¤ strategies. The risk-dominant action of the underlying one-shot game is selected when the option to delay effort is commensurate with the option to wait longer for others' actions. The possibility of waiting longer for the actions of others enhances coordination, but the option of delaying one s actions can induce severe coordination failures: if agents are very patient, they might get arbitrarily low expected payoffs even in cases where coordination would yield arbitrarily large returns.
|Date of creation:||02 Aug 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 55 (011) 3799-3350
Fax: 55 (011) 3799-3357
Web page: http://eesp.fgv.brEmail:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kiyotaki, Nobuhiro, 1988. "Multiple Expectational Equilibria under Monopolistic Competition," The Quarterly Journal of Economics, MIT Press, vol. 103(4), pages 695-713, November.
- George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2007. "Dynamic Global Games of Regime Change: Learning, Multiplicity, and the Timing of Attacks," Econometrica, Econometric Society, vol. 75(3), pages 711-756, 05.
- Nicholas Bloom, 2009.
"The Impact of Uncertainty Shocks,"
Econometric Society, vol. 77(3), pages 623-685, 05.
- Frankel, David M. & Burdzy, Krzysztof & Pauzner, Ady, 2001.
"Fast Equilibrium Selection by Rational Players Living in a Changing World,"
Staff General Research Papers
11923, Iowa State University, Department of Economics.
- Burdzy, Krzysztof & Frankel, David M & Pauzner, Ady, 2001. "Fast Equilibrium Selection by Rational Players Living in a Changing World," Econometrica, Econometric Society, vol. 69(1), pages 163-89, January.
- Jakub Steiner, 2006.
ESE Discussion Papers
162, Edinburgh School of Economics, University of Edinburgh.
- Carlsson, H. & Van Damme, E., 1990.
"Global Games And Equilibrium Selection,"
9052, Tilburg - Center for Economic Research.
- Carlsson, H. & van Damme, E.E.C., 1993. "Global games and equilibrium selection," Other publications TiSEM 49a54f00-dcec-4fc1-9488-4, School of Economics and Management.
- Carlsson, H. & van Damme, E.E.C., 1990. "Global games and equilibrium selection," Discussion Paper 1990-52, Tilburg University, Center for Economic Research.
- Hans Carlsson & Eric van Damme, 1993. "Global Games and Equilibrium Selection," Levine's Working Paper Archive 122247000000001088, David K. Levine.
- Gorton, Gary B., 2010. "Slapped by the Invisible Hand: The Panic of 2007," OUP Catalogue, Oxford University Press, number 9780199734153, March.
- Guimaraes, Bernardo, 2006. "Dynamics of currency crises with asset market frictions," Journal of International Economics, Elsevier, vol. 68(1), pages 141-158, January.
- Eugen Kovac & Jakub Steiner, 2008.
"Reversibility in Dynamic Coordination Problems,"
CERGE-EI Working Papers
wp374, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Zoltan Pozsar & Tobias Adrian & Adam Ashcraft & Hayley Boesky, 2010.
458, Federal Reserve Bank of New York.
- Frankel, David M. & Morris, Stephen & Pauzner, Ady, 2003.
"Equilibrium selection in global games with strategic complementarities,"
Journal of Economic Theory,
Elsevier, vol. 108(1), pages 1-44, January.
- David M. Frankel & Stephen Morris & Ady Pauzner, 2000. "Equilibrium Selection in Global Games with Strategic Complementarities," Econometric Society World Congress 2000 Contributed Papers 1490, Econometric Society.
- David M. Frankel & Stephen Morris & Ady Pauzner, 2001. "Equilibrium Selection in Global Games with Strategic Complementarities," Cowles Foundation Discussion Papers 1336, Cowles Foundation for Research in Economics, Yale University.
- Frankel, David M. & Morris, Stephen & Pauzner, Ady, 2003. "Equilibrium Selection in Global Games with Strategic Complementarities," Staff General Research Papers 11920, Iowa State University, Department of Economics.
- Dasgupta, Amil, 2007. "Coordination and delay in global games," Journal of Economic Theory, Elsevier, vol. 134(1), pages 195-225, May.
- Frankel, David M. & Pauzner, Ady, 2000.
"Resolving Indeterminacy in Dynamic Settings: The Role of Shocks,"
Staff General Research Papers
11924, Iowa State University, Department of Economics.
- David Frankel & Ady Pauzner, 2000. "Resolving Indeterminacy In Dynamic Settings: The Role Of Shocks," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 285-304, February.
- Antonio Ciccone, 2002.
"Input Chains and Industrialization,"
Review of Economic Studies,
Oxford University Press, vol. 69(3), pages 565-587.
- GUIMARAES, Bernardo & ARAUJO, Luis, 2013.
"Coordination in the use of money,"
Textos para discussão
325, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
- Durlauf, Steven N, 1993.
"Nonergodic Economic Growth,"
Review of Economic Studies,
Wiley Blackwell, vol. 60(2), pages 349-66, April.
- Mathevet, Laurent & Steiner, Jakub, 2013. "Tractable dynamic global games and applications," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2583-2619.
- Zhiguo He & Wei Xiong, 2012. "Dynamic Debt Runs," Review of Financial Studies, Society for Financial Studies, vol. 25(6), pages 1799-1843.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988.
"Industrialization and the Big Push,"
NBER Working Papers
2708, National Bureau of Economic Research, Inc.
- Ted O'Donoghue & Matthew Rabin, 1997.
"Incentives for Procrastinators,"
1181, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Sylvain Chassang, 2010. "Fear of Miscoordination and the Robustness of Cooperation in Dynamic Global Games With Exit," Econometrica, Econometric Society, vol. 78(3), pages 973-1006, 05.
- repec:ner:tilbur:urn:nbn:nl:ui:12-154416 is not listed on IDEAS
- Charles I. Jones, 2011. "Intermediate Goods and Weak Links in the Theory of Economic Development," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 1-28, April.
- Araujo, Luis & Guimarães, Bernardo, 2011. "Equilibrium selection in a fundamental model of money," CEPR Discussion Papers 8200, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:fgv:eesptd:324. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Núcleo de Computação da EPGE)
If references are entirely missing, you can add them using this form.