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The effect of options on coordination

  • Bernardo Guimaraes

    (Sao Paulo School of Economics - FGV)

  • Luis Araujo

    (Michigan State University)

In some coordination problems, an agent's payoff depends on what other agents will do in the future. This paper studies how constraints on the timing of actions affect equilbrium in those problems. While the possibility of waiting longer for others' actions helps agents to coordinate in the good equilibrium, the option of delaying one's actions harms coordination. In a symmetric case, the risk-dominant equilibrium of the corresponding one-shot game is selected.

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Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 474.

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Date of creation: 2012
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Handle: RePEc:red:sed012:474
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