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Learning Options in Coordination Problems

Author

Listed:
  • Jakub Steiner

    (University of Edinburgh)

  • Eugen Kovac

    (University of Bonn)

Abstract

We study intertemporal tradeoffs of players who fear a potential crisis in an environment with strategic complementarities. Such players may wish to delay their investment decisions in order to gather additional information. Drawing on the global game framework, we characterize the effects of the learning option on the coordination outcome. The option can either enhance or hamper efficient coordination, and we are able to determine which effect arises based only on qualitative but not quantitative features of the payoff functions. This allows to draw normative conclusions for the provision of the option.

Suggested Citation

  • Jakub Steiner & Eugen Kovac, 2008. "Learning Options in Coordination Problems," 2008 Meeting Papers 848, Society for Economic Dynamics.
    • Handle: RePEc:red:sed008:848
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    References listed on IDEAS

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