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Strategic substitutabilities versus strategic complementarities: Towards a general theory of expectational coordination?

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  • Roger Guesnerie

    (Collège de France - Chaire Théorie économique et organisation sociale - CdF (institution) - Collège de France, PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper contrasts the views of expectational coordination in a stylised economic model under two polar assumptions: Strategic Complementarities (StCo) dominate or on the contrary are dominated by Strategic Substitutabilities (StSu). Although in the StCo case, "uniqueness" often "buys" "eductive stability", the two issues are strikingly different in the second case. Furthermore if, in the first case, incomplete information often improves "expectational coordination", it may have the converse effect in the StSu case. It is finally argued that, in macroeconomic contexts, StSu often unambiguously dominate StCo, even in a large class of models with Keynesian features, and even in an aggregate framework that magnifies the StCo effects. The "remains" of StCo in general cases are discussed.

Suggested Citation

  • Roger Guesnerie, 2005. "Strategic substitutabilities versus strategic complementarities: Towards a general theory of expectational coordination?," PSE Working Papers halshs-00590856, HAL.
    • Handle: RePEc:hal:psewpa:halshs-00590856
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590856
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    Cited by:

    1. Heemeijer, Peter & Hommes, Cars & Sonnemans, Joep & Tuinstra, Jan, 2009. "Price stability and volatility in markets with positive and negative expectations feedback: An experimental investigation," Journal of Economic Dynamics and Control, Elsevier, vol. 33(5), pages 1052-1072, May.
    2. Rodrigo Harrison & Pedro Jara‐Moroni, 2021. "Global Games With Strategic Substitutes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(1), pages 141-173, February.
    3. Harrison, Rodrigo & Jara-Moroni, Pedro, 2015. "A dominance solvable global game with strategic substitutes," Journal of Mathematical Economics, Elsevier, vol. 57(C), pages 1-11.
    4. Jara-Moroni, Pedro, 2012. "Rationalizability in games with a continuum of players," Games and Economic Behavior, Elsevier, vol. 75(2), pages 668-684.
    5. Luigi Bonatti, 2007. "Resolving Indeterminacy in Coordination Games: A New Approach Applied to a Pay-as-you-go Pension Scheme," Journal of Economics, Springer, vol. 91(3), pages 273-295, July.

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