Defense Feedback and Global-Game Selection

Georgy Lukyanov and Yaroslav Yosifov
Additional contact information
Georgy Lukyanov: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Yaroslav Yosifov: HSE - Vysšaja škola èkonomiki = National Research University Higher School of Economics [Moscow]

Working Papers from HAL

Abstract: Global games select a unique cutoff when a player's incentive moves monotonically with private information. We show that this logic can fail when a privately informed participant can take a costly, simultaneous, and unobserved action that defends the status quo. In a currency-attack model, the defender acts only at intermediate signals. Along the traders' cutoff equation, this interval response creates an endogenous defense-loss term that vanishes at the endpoints of an activation component but can dominate the decreasing benchmark payoff margin in between. We establish a primitive region in which defense is inactive and uniqueness survives, and a finite-CDF overshoot condition under which two active defense cutoff roots coexist with the inactive benchmark root. Because marginal indifference need not imply global incentives, we also give sufficient conditions for a genuine monotone cutoff best response. Finally, outward-rounded interval arithmetic proves that a proper-prior parameter vector has exactly three symmetric monotone-cutoff equilibria and that this topology persists locally. The result isolates a payoff-based boundary of global-game selection: hidden intervention can restore multiplicity without public signalling or a perturbation of the information hierarchy.

Keywords: global games; regime change; active defense; private information; equilibrium multiplicity; computer-assisted proof (search for similar items in EconPapers)
Date: 2026-10-15
Note: View the original document on HAL open archive server: https://hal.science/hal-05801389v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05801389v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05801389

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().