Dynamic coordination with individual learning

Amil Dasgupta, Jakub Steiner and Colin Stewart

Games and Economic Behavior, 2012, vol. 74, issue 1, 83-101

Abstract: We study coordination in dynamic global games with private learning. Players choose whether and when to invest irreversibly in a project whose success depends on its quality and the timing of investment. Players gradually learn about project quality. We identify conditions on temporal incentives under which, in sufficiently long games, players coordinate on investing whenever doing so is not dominated. Roughly speaking, this outcome occurs whenever playersʼ payoffs are sufficiently tolerant of non-simultaneous coordination. We also identify conditions under which players coordinate on the risk-dominant action. We provide foundations for these results in terms of higher order beliefs.

Keywords: Coordination; Global games; Learning; Common knowledge; Delay (search for similar items in EconPapers)
JEL-codes: C72 D82 D83 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:74:y:2012:i:1:p:83-101

DOI: 10.1016/j.geb.2011.07.005

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