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Equilibrium Selection in Global Games with Strategic Complementarities

Author

Listed:
  • David M. Frankel

    (Tel Aviv University)

  • Stephen Morris

    (Yale University)

  • Ady Pauzner

    (Tel Aviv University)

Abstract

We study games with strategic complementarities, arbitrary numbers of players and actions, and slightly noisy payoff signals. We prove limit uniqueness: as the signal noise vanishes, the incomplete information game has a unique strategy profile that survives iterative dominance. This generalizes a result of Carlsson and van Damme for two player, two action games. The surviving profile, however, may depend on fine details of the structure of the noise. We provide sufficient conditions on payoffs for there to be noise-independent selection.

Suggested Citation

  • David M. Frankel & Stephen Morris & Ady Pauzner, 2000. "Equilibrium Selection in Global Games with Strategic Complementarities," Econometric Society World Congress 2000 Contributed Papers 1490, Econometric Society.
    • Handle: RePEc:ecm:wc2000:1490
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    References listed on IDEAS

    as
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    6. Giancarlo Corsetti & Amil Dasgupta & Stephen Morris & Hyun Song Shin, 2004. "Does One Soros Make a Difference? A Theory of Currency Crises with Large and Small Traders," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(1), pages 87-113.
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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