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Renegotiation and Coordination with Private Values

Author

Listed:
  • Yuval Heller

    () (Bar Ilan University, Israel)

  • Christoph Kuzmics

    () (University of Graz, Austria)

Abstract

We define and characterize renegotiation-proof equilibria of coordination games with preplay communication in which players have private preferences over the feasible coordinated outcomes. These are such that players never miscoordinate, players coordinate on their jointly preferred outcome whenever there is one, and players communicate only the ordinal part of their preferences. This set of renegotiation proof equilibrium strategies does not depend on the distribution of private preferences, and is thus robust to changes in players’ beliefs. Moreover, these equilibria are interim Pareto efficient and evolutionarily stable.

Suggested Citation

  • Yuval Heller & Christoph Kuzmics, 2019. "Renegotiation and Coordination with Private Values," Graz Economics Papers 2019-10, University of Graz, Department of Economics.
  • Handle: RePEc:grz:wpaper:2019-10
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    File URL: http://www100.uni-graz.at/vwlwww/forschung/RePEc/wpaper/2019-10.pdf
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    References listed on IDEAS

    as
    1. Sandeep Baliga & Tomas Sjöström, 2004. "Arms Races and Negotiations," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 351-369.
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    3. Karl H. Schlag & Dieter Balkenborg, 2001. "Evolutionarily stable sets," International Journal of Game Theory, Springer;Game Theory Society, vol. 29(4), pages 571-595.
    4. Bruno Strulovici, 2017. "Contract Negotiation and the Coase Conjecture: A Strategic Foundation for Renegotiation‐Proof Contracts," Econometrica, Econometric Society, vol. 85, pages 585-616, March.
    5. Evans, Robert & Maskin, Eric, 1989. "Efficient renegotiation--proof equilibria in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 361-369, December.
    6. Kuzmics, Christoph, 2004. "Stochastic evolutionary stability in extensive form games of perfect information," Games and Economic Behavior, Elsevier, vol. 48(2), pages 321-336, August.
    7. Bernergård, Axel & Mohlin, Erik, 2019. "Evolutionary selection against iteratively weakly dominated strategies," Games and Economic Behavior, Elsevier, vol. 117(C), pages 82-97.
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    More about this item

    Keywords

    Coordination games; Renegotiation-proof; Equilibrium entrants; Secret handshake; Incomplete information; Evolutionary robustness;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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