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Extreme Equilibria: The Benefits of Correlation

Author

Listed:
  • Kirill Rudov
  • Fedor Sandomirskiy
  • Leeat Yariv

Abstract

Correlated equilibria arise naturally when agents communicate or rely on intermediaries such as recommendation systems. We study when a given Nash equilibrium can be improved within the set of correlated equilibria for general objectives. Our key insight is a detail-free criterion: any Nash equilibrium with three or more randomizing agents is generically improvable. We refine this insight to specific classes of games and objectives, including Pareto and utilitarian welfare, and provide constructive methods to obtain improvements. Our findings underscore the ubiquity of improvable Nash equilibria and the crucial role of correlation in enhancing strategic outcomes.

Suggested Citation

  • Kirill Rudov & Fedor Sandomirskiy & Leeat Yariv, 2026. "Extreme Equilibria: The Benefits of Correlation," NBER Working Papers 35170, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35170
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    More about this item

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D60 - Microeconomics - - Welfare Economics - - - General

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