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Coordination under limited depth of reasoning

Terri Kneeland

Games and Economic Behavior, 2016, vol. 96, issue C, 49-64

Abstract: This paper provides the first unified explanation of behavior in coordinated attack games under both public and private information. It demonstrates that the main experimental results, such as threshold strategies, comparative statics, and the differences in behavior under public and private information, are robust predictions of limited depth of reasoning models. This is in contrast to equilibrium, which mispredicts the coordinating roles of public and private information. The analysis has implications for understanding macroeconomic phenomena, like currency attacks and debt crises, which are commonly modeled using incomplete information coordinated attack games.

Keywords: Coordination games; Level-k models; Cognitive hierarchy models; Global games (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2016
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