 Equilibrium selection in static and dynamic entry gamesJohn Duffy and Jack Ochs Games and Economic Behavior, 2012, vol. 76, issue 1, 97-116 Abstract: We experimentally assess the predictive power of two equilibrium selection principles for binary N-player entry games with strategic complementarities. In static entry games, we test the theory of global games which posits that players play games of complete information as if they were playing a related global game of incomplete information. By contrast, in dynamic n-period entry games, the efficient subgame perfect equilibrium prediction is for all to enter whenever the payoff relevant state variable exceeds a certain threshold. The subgame perfect entry threshold of the dynamic game will generally differ from the global game threshold of the static version of the same game. Nevertheless, our experimental findings suggest that entry thresholds are similar between static and dynamic versions of the same game. An implication is that the modeling of entry games with strategic complementarities as static, one-shot games – ignoring the dynamic element of such interactions – may not be unreasonable. Keywords: Coordination problems; Entry games; Strategic complementarities; Speculative attacks; Equilibrium selection; Global games; Dynamic games; Subgame perfection; Experiments (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:76:y:2012:i:1:p:97-116 DOI: 10.1016/j.geb.2012.05.005 Access Statistics for this article Games and Economic Behavior is currently edited by E. Kalai More articles in Games and Economic Behavior from Elsevier |
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