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The Value of a Coordination Game

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  • Kets, Willemien

    (University of Oxford)

  • Kager, Wouter
  • Sandroni, Alvaro

Abstract

The value of a game is the payoff a player can expect (ex ante) from playing the game. Understanding how the value changes with economic primitives is critical for policy design and welfare. However, for games with multiple equilibria, the value is difficult to determine. We therefore develop a new theory of the value of coordination games. The theory delivers testable comparative statics on the value and delivers novel insights relevant to policy design. For example, policies that shift behavior in the desired direction can make everyone worse off, and policies that increase everyone's payoffs can reduce welfare.

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  • Kets, Willemien & Kager, Wouter & Sandroni, Alvaro, 2021. "The Value of a Coordination Game," SocArXiv ymzrd, Center for Open Science.
    • Handle: RePEc:osf:socarx:ymzrd
    DOI: 10.31219/osf.io/ymzrd
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    Cited by:

    1. Roweno J. R. K. Heijmans, 2023. "Unraveling Coordination Problems," Papers 2307.08557, arXiv.org, revised Aug 2023.
    2. Heijmans, Roweno J.R.K., 2023. "Unraveling Coordination Problems," Discussion Papers 2023/20, Norwegian School of Economics, Department of Business and Management Science.

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    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
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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