Improving Nash by coarse correlation

Herve Moulin, Indrajit Ray () and Sonali Sen Gupta

Journal of Economic Theory, 2014, vol. 150, issue C, 852-865

Abstract: We consider a class of symmetric two-person quadratic games where coarse correlated equilibria – CCE – (Moulin and Vial [16]) can strictly improve upon the Nash equilibrium payoffs, while correlated equilibrium – CE – (Aumann [3,4]) cannot, because these games are potential games with concave potential functions. We compute the largest feasible total utility in any CCE in those games and show that it is achieved by a CCE involving only two pure strategy profiles. Applications include the Cournot duopoly and the game of public good provision, where the improvement over and above the Nash equilibrium payoff can be substantial.

Keywords: Coarse correlated equilibrium; Quadratic games; Duopoly models; Public good (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (25)

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Working Paper: Improving Nash by Coarse Correlation (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:150:y:2014:i:c:p:852-865

DOI: 10.1016/j.jet.2013.10.008

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