Extreme Equilibria: The Benefits of Correlation

Kirill Rudov, Fedor Sandomirskiy and Leeat Yariv

No 35170, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Correlated equilibria arise naturally when agents communicate or rely on intermediaries such as recommendation systems. We study when a given Nash equilibrium can be improved within the set of correlated equilibria for general objectives. Our key insight is a detail-free criterion: any Nash equilibrium with three or more randomizing agents is generically improvable. We refine this insight to specific classes of games and objectives, including Pareto and utilitarian welfare, and provide constructive methods to obtain improvements. Our findings underscore the ubiquity of improvable Nash equilibria and the crucial role of correlation in enhancing strategic outcomes.

JEL-codes: C60 C72 D02 D60 (search for similar items in EconPapers)
Date: 2026-05
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