The Theory of Global Games on Test: Experimental Analysis of Coordination Games with Public and Private Information

Frank Heinemann, Rosemarie Nagel and Peter Ockenfels

Econometrica, 2004, vol. 72, issue 5, 1583-1599

Abstract: The theory of global games has shown that coordination games with multiple equilibria may have a unique equilibrium if certain parameters of the payoff function are private information instead of common knowledge. We report the results of an experiment designed to test the predictions of this theory. Comparing sessions with common and private information, we observe only small differences in behavior. For common information, subjects coordinate on threshold strategies that deviate from the global game solution towards the payoff-dominant equilibrium. For private information, thresholds are closer to the global game solution than for common information. Variations in the payoff function affect behavior as predicted by comparative statics of the global game solution. Predictability of coordination points is about the same for both information conditions. Copyright The Econometric Society 2004.

Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (170)

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1468-0262.2004.00544.x link to full text (text/html)
Access to full text is restricted to subscribers.

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:ecm:emetrp:v:72:y:2004:i:5:p:1583-1599

Ordering information: This journal article can be ordered from
https://www.economet ... ordering-back-issues

Access Statistics for this article

Econometrica is currently edited by Guido Imbens

More articles in Econometrica from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().