IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/6470.html
   My bibliography  Save this paper

Recursive Global Games

Author

Listed:
  • Toxvaerd, Flavio
  • Giannitsarou, Chryssi

Abstract

The present paper contributes to the literature on dynamic games with strategic complementarities, in two interrelated ways. First, we identify a class of dynamic complete information games in which intertemporal complementarities and multiple equilibria can be fruitfully analyzed. Second, we extend the analysis to an incomplete information framework, where results from the literature on global games can be applied to select a unique Markov perfect equilibrium in monotone strategies.

Suggested Citation

  • Toxvaerd, Flavio & Giannitsarou, Chryssi, 2007. "Recursive Global Games," CEPR Discussion Papers 6470, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6470
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP6470
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steiner, Jakub, 2008. "Coordination of mobile labor," Journal of Economic Theory, Elsevier, vol. 139(1), pages 25-46, March.
    2. Frankel, David M. & Morris, Stephen & Pauzner, Ady, 2003. "Equilibrium selection in global games with strategic complementarities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 1-44, January.
    3. Toxvaerd, Flavio, 2008. "Strategic merger waves: A theory of musical chairs," Journal of Economic Theory, Elsevier, vol. 140(1), pages 1-26, May.
    4. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September.
    5. Bergin, J & Bernhardt, D, 1995. "Anonymous Sequential Games: Existence and Characterization of Equilibria," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(3), pages 461-489, May.
    6. Jovanovic, Boyan & Rosenthal, Robert W., 1988. "Anonymous sequential games," Journal of Mathematical Economics, Elsevier, vol. 17(1), pages 77-87, February.
    7. Burdzy, Krzysztof & Frankel, David M & Pauzner, Ady, 2001. "Fast Equilibrium Selection by Rational Players Living in a Changing World," Econometrica, Econometric Society, vol. 69(1), pages 163-189, January.
    8. Steiner, Jakub, 2008. "Coordination cycles," Games and Economic Behavior, Elsevier, vol. 63(1), pages 308-327, May.
    9. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275, Cowles Foundation for Research in Economics, Yale University.
    10. Milgrom, Paul R & Qian, Yingyi & Roberts, John, 1991. "Complementarities, Momentum, and the Evolution of Modern Manufacturing," American Economic Review, American Economic Association, vol. 81(2), pages 84-88, May.
    11. Daisuke Oyama, 2004. "Booms And Slumps In A Game Of Sequential Investment With The Changing Fundamentals," The Japanese Economic Review, Japanese Economic Association, vol. 55(3), pages 311-320, September.
    12. Drew Fudenberg & David Levine, 2008. "Limit Games and Limit Equilibria," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 2, pages 21-39, World Scientific Publishing Co. Pte. Ltd..
    13. Frankel, D.M., 2001. "Payoff Shocks and Equilibrium Selection with Endogenous Flexibility," Papers 2001-9, Tel Aviv.
    14. Drew Fudenberg & David Levine, 2008. "Subgame–Perfect Equilibria of Finite– and Infinite–Horizon Games," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 1, pages 3-20, World Scientific Publishing Co. Pte. Ltd..
    15. Durlauf, Steven N, 1991. "Multiple Equilibria and Persistence in Aggregate Fluctuations," American Economic Review, American Economic Association, vol. 81(2), pages 70-74, May.
    16. Morris, S. & Shin, H.S., 1998. "A Theory of the Onset of Currency Attacks," Economics Papers 149, Economics Group, Nuffield College, University of Oxford.
    17. Curtat, Laurent O., 1996. "Markov Equilibria of Stochastic Games with Complementarities," Games and Economic Behavior, Elsevier, vol. 17(2), pages 177-199, December.
    18. David Frankel & Ady Pauzner, 2000. "Resolving Indeterminacy in Dynamic Settings: The Role of Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(1), pages 285-304.
    19. Harris, Christopher, 1985. "A characterisation of the perfect equilibria of infinite horizon games," Journal of Economic Theory, Elsevier, vol. 37(1), pages 99-125, October.
    20. Bergin, James & Bernhardt, Dan, 1992. "Anonymous sequential games with aggregate uncertainty," Journal of Mathematical Economics, Elsevier, vol. 21(6), pages 543-562.
    21. Mathias Dewatripont & Lars Peter Hansen & Stephen Turnovsky, 2003. "Advances in Economics and Econometrics: Theory and Applications, Eighth World Congress," ULB Institutional Repository 2013/176003, ULB -- Universite Libre de Bruxelles.
    22. K. Hinderer, 2005. "Lipschitz Continuity of Value Functions in Markovian Decision Processes," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 62(1), pages 3-22, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. , L., 2013. "Fragility of reputation and clustering of risk-taking," Theoretical Economics, Econometric Society, vol. 8(3), September.
    2. Barbieri, Stefano & Mattozzi, Andrea, 2009. "Membership in citizen groups," Games and Economic Behavior, Elsevier, vol. 67(1), pages 217-232, September.
    3. Huanxing Yang, 2010. "Information aggregation and investment cycles with strategic complementarity," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(2), pages 281-311, May.
    4. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2007. "Dynamic Global Games of Regime Change: Learning, Multiplicity, and the Timing of Attacks," Econometrica, Econometric Society, vol. 75(3), pages 711-756, May.
    5. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2004. "Information Dynamics and Equilibrium Multiplicity in Global Games of Regime Change," NBER Working Papers 11017, National Bureau of Economic Research, Inc.
    6. Chong Huang, 2018. "Coordination and social learning," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(1), pages 155-177, January.
    7. Christian Hellwig, 2004. "Dynamic Global Games of Regime Change: Learning, Multiplicity and Timing of Attacks (August 2006, with George-Marios Angeletos and Alessandro Pavan)," UCLA Economics Online Papers 279, UCLA Department of Economics.
    8. Chong Huang, 2011. "Coordination and Social Learning," PIER Working Paper Archive 11-021, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    9. Angeletos, G.-M. & Lian, C., 2016. "Incomplete Information in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1065-1240, Elsevier.
    10. Huang, Chong, 2017. "Defending against speculative attacks: The policy maker's reputation," Journal of Economic Theory, Elsevier, vol. 171(C), pages 1-34.
    11. Romeo Matthew Balanquit, 2016. "Threshold Bank-run Equilibrium in Dynamic Games," UP School of Economics Discussion Papers 201607, University of the Philippines School of Economics.
    12. Sylvain Chassang & Gerard Padró I Miquel, 2010. "Conflict and Deterrence Under Strategic Risk," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(4), pages 1821-1858.
    13. George-Marios Angeletos & Chen Lian, 2016. "Incomplete Information in Macroeconomics: Accommodating Frictions in Coordination," NBER Working Papers 22297, National Bureau of Economic Research, Inc.
    14. Yamin Ahmad & Pietro Cova & Rodrigo Harrison, 2004. "Foreign Direct Investment versus Portfolio Investment : A Global Games Approach," Working Papers 05-03, UW-Whitewater, Department of Economics.
    15. Steiner, Jakub, 2008. "Coordination cycles," Games and Economic Behavior, Elsevier, vol. 63(1), pages 308-327, May.
    16. COLLA, Paolo & GARCIA, Filomena, 2004. "Technology adoption with forward looking agents," LIDAM Discussion Papers CORE 2004041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. Chong Huang, 2011. "Defending Against Speculative Attacks: Reputation, Learning, and Coordination," PIER Working Paper Archive 11-039, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frankel, David M., 2017. "Efficient ex-ante stabilization of firms," Journal of Economic Theory, Elsevier, vol. 170(C), pages 112-144.
    2. COLLA, Paolo & GARCIA, Filomena, 2004. "Technology adoption with forward looking agents," LIDAM Discussion Papers CORE 2004041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Steiner, Jakub, 2008. "Coordination cycles," Games and Economic Behavior, Elsevier, vol. 63(1), pages 308-327, May.
    4. Angeletos, G.-M. & Lian, C., 2016. "Incomplete Information in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1065-1240, Elsevier.
    5. Frankel, David M., 2012. "Recurrent crises in global games," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 309-321.
    6. Araujo, Luis & Guimaraes, Bernardo, 2015. "Intertemporal coordination with delay options," Journal of Economic Theory, Elsevier, vol. 157(C), pages 793-810.
    7. Stephen Morris & Hyun Song Shin, 2003. "Heterogeneity and Uniqueness in Interaction Games," Cowles Foundation Discussion Papers 1402, Cowles Foundation for Research in Economics, Yale University.
    8. Toxvaerd, Flavio, 2008. "Strategic merger waves: A theory of musical chairs," Journal of Economic Theory, Elsevier, vol. 140(1), pages 1-26, May.
    9. Bernardo Guimaraes & Luis Araujo, 2012. "The effect of options on coordination," 2012 Meeting Papers 474, Society for Economic Dynamics.
    10. Bernardo Guimaraes & Caio Machado & Ana E. Pereira, 2020. "Dynamic coordination with timing frictions: Theory and applications," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 656-697, June.
    11. George-Marios Angeletos & Chen Lian, 2016. "Incomplete Information in Macroeconomics: Accommodating Frictions in Coordination," NBER Working Papers 22297, National Bureau of Economic Research, Inc.
    12. Frankel, David M., 2010. "Shocks and Crises in the Long Run," Staff General Research Papers Archive 31687, Iowa State University, Department of Economics.
    13. Frankel, David M., 2015. "Insuring Customers of a Unionized Firm Against Loss of Network Benefits," Staff General Research Papers Archive 38580, Iowa State University, Department of Economics.
    14. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275, Cowles Foundation for Research in Economics, Yale University.
    15. Dasgupta, Amil, 2007. "Coordination and delay in global games," Journal of Economic Theory, Elsevier, vol. 134(1), pages 195-225, May.
    16. David M. Frankel, 2010. "Rent Seeking and Economic Fragility," Levine's Bibliography 661465000000000159, UCLA Department of Economics.
    17. Roy, Sunanda & Singh, Rajesh & Weninger, Quinn, 2021. "Entry under placement uncertainty," ISU General Staff Papers 202102240800001096, Iowa State University, Department of Economics.
    18. Frankel, David M. & Morris, Stephen & Pauzner, Ady, 2003. "Equilibrium selection in global games with strategic complementarities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 1-44, January.
    19. Pekka Sääskilahti, 2016. "Buying Decision Coordination and Monopoly Pricing of Network Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(2), pages 313-333, April.
    20. Mathevet, Laurent, 2014. "Beliefs and rationalizability in games with complementarities," Games and Economic Behavior, Elsevier, vol. 85(C), pages 252-271.

    More about this item

    Keywords

    Dynamic global games; Dynamic supermodular games; Endogenous cycles;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:6470. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.