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Common Belief Foundations of Global Games

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Listed:
  • Stephen Morris

    (Princeton University)

  • Hyun Song Shin

    (Bank for International Settlements)

  • Muhamet Yildiz

    (M.I.T.)

Abstract

We study coordination games under general type spaces. We characterize rationalizable actions in terms of the properties of the belief hierarchies and show that there is a unique rationalizable action played whenever there is approximate common certainty of rank beliefs, defined as the probability the players assign to their payoff parameters being higher than their opponents'. We argue that this is the driving force behind selection results for the specific type spaces in the global games literature.

Suggested Citation

  • Stephen Morris & Hyun Song Shin & Muhamet Yildiz, 2015. "Common Belief Foundations of Global Games," Working Papers 069_2015, Princeton University, Department of Economics, Econometric Research Program..
    • Handle: RePEc:pri:metric:069_2015
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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