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Identifier to cite or link to this item: https://hdl.handle.net/10086/13819

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Title
Coordination Failures under Incomplete Information and Global Games
Creator
Creator Name
Fukao, Kyoji Fukao, Kyoji
深尾, 京司 深尾, 京司
フカオ, キョウジ フカオ, キョウジ
Affiliation
Affiliation Name
Hitotsubashi University
Editor
Contributor Name
Institute of Economic Research, Hitotsubashi University
Key Word
global game
coordination failure
speculative attack
network externality
JEL
C73
D82
D84
F32
Abstract
Carlsson and van Damme (1991, 93) presented a notion of a global game, which is an incomplete information game where the actual payoff structure is affected by a realization of a common shock and where each player gets noisy private information of the shock. For n -person symmetric games with two possible actions characterized by strategic complementarity, they showed that equilibrium play in a global game with vanishing noise is uniquely determined. The concept of global games is important not only as a theory of the most refined notion of equilibrium but also as a theory of coordination failures under private information. From this viewpoint, this paper makes the theory of global games more general and more applicable to such problems. The implications of the theory of global games are investigated in two specific models: a speculative attack model and a network externality model. It is shown that both the monetary authority in the speculative attack model and the central planner in the network externality model will prefer the equilibrium in a global game with small noise to the worst equilibrium in the corresponding complete information game. Therefore, they will welcome the existence of small noise, if they apply mini-max principle to multiple equilibrium problems.
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
1994-10
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
Discussion paper series. A ; No. a299
NCID
AA11476336
Number of Pages
28
Appears in Collections
Discussion paper series / Institute of Economic Research, Hitotsubashi University
URL
https://hdl.handle.net/10086/13819