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Equilibrium Selection in Global Games with Strategic Substitutes

Author

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  • Rodrigo J. Harrison

    (UTFSM Chile and Georgetown University USA)

Abstract

This paper proves an equilibrium selection result for a class of games with strategic substitutes. Specifically, for a general class of binary action, N-player games, we prove that each such game has a unique equilibrium strategy profile. Using a global game approach first introduced by Carlsson and van Damme (1993), recent selection results apply to games with strategic complementarities. The present paper uses the same approach but removes the assumption of perfect symmetry in the dominance region of the players' payoffs. Instead we assume that players are ordered such that asymmetric dominance regions overlapped sequentially. This allow us to extend selection results to a class of games with strategic substitutes.

Suggested Citation

  • Rodrigo J. Harrison, 2003. "Equilibrium Selection in Global Games with Strategic Substitutes," Game Theory and Information 0306003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:0306003
    Note: Type of Document - Acrobat PDF; pages: 35
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/game/papers/0306/0306003.pdf
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    References listed on IDEAS

    as
    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, April.
    2. Morris, Stephen & Shin, Hyun Song, 1998. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," American Economic Review, American Economic Association, vol. 88(3), pages 587-597, June.
    3. 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.
    4. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September.
    5. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
    6. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275R, Cowles Foundation for Research in Economics, Yale University, revised Aug 2001.
    7. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-1037, September.
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    Citations

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    Cited by:

    1. Harrison, Rodrigo & Jara-Moroni, Pedro, 2015. "A dominance solvable global game with strategic substitutes," Journal of Mathematical Economics, Elsevier, vol. 57(C), pages 1-11.
    2. Rosenkranz, Stephanie & Weitzel, Utz, 2012. "Network structure and strategic investments: An experimental analysis," Games and Economic Behavior, Elsevier, vol. 75(2), pages 898-920.
    3. repec:use:tkiwps:2424 is not listed on IDEAS

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    More about this item

    Keywords

    Global Games; Equilibrium Selection; Strategic Substitutes.;
    All these keywords.

    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
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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