Common belief foundations of global games

Stephen Morris, Hyun Song Shin and Muhamet Yildiz ()

Journal of Economic Theory, 2016, vol. 163, issue C, 826-848

Abstract: We study coordination games under general type spaces. We characterize rationalizable actions in terms of the properties of the belief hierarchies and show that there is a unique rationalizable action played whenever there is approximate common certainty of rank beliefs, defined as the probability the players assign to their payoff parameters being higher than their opponents'. We argue that this is the driving force behind selection results for the specific type spaces in the global games literature.

Keywords: Global games; Risk-dominance; Rank beliefs; Higher-order beliefs; Rationalizability (search for similar items in EconPapers)
JEL-codes: C72 D82 D84 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Related works:
Working Paper: Common Belief Foundations of Global Games (2015)
Working Paper: Common Belief Foundations of Global Games (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:163:y:2016:i:c:p:826-848

DOI: 10.1016/j.jet.2016.03.007

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