Technical Note—Coordination with Local Information

Munther A. Dahleh (), Alireza Tahbaz-Salehi, John N. Tsitsiklis () and Spyros I. Zoumpoulis ()
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Munther A. Dahleh: Laboratory for Information and Decision Systems, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
John N. Tsitsiklis: Laboratory for Information and Decision Systems, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Spyros I. Zoumpoulis: Decision Sciences Area, INSEAD, 77300 Fontainebleau, France

Operations Research, 2016, vol. 64, issue 3, 622-637

Abstract: We study the role of local information channels in enabling coordination among strategic agents. Building on the standard finite-player global games framework, we show that the set of equilibria of a coordination game is highly sensitive to how information is locally shared among different agents. In particular, we show that the coordination game has multiple equilibria if there exists a collection of agents such that (i) they do not share a common signal with any agent outside of that collection and (ii) their information sets form an increasing sequence of nested sets. Our results thus extend the results on the uniqueness and multiplicity of equilibria beyond the well-known cases in which agents have access to purely private or public signals. We then provide a characterization of the set of equilibria as a function of the penetration of local information channels. We show that the set of equilibria shrinks as information becomes more decentralized.

Keywords: coordination; local information; social networks; global games (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:64:y:2016:i:3:p:622-637

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