Equilibria in a dynamic global game: the role of cohort effects

Paul Heidhues () and Nicolas Melissas

Economic Theory, 2006, vol. 28, issue 3, 557 pages

Abstract: We introduce strategic waiting in a global game setting with irreversible investment. Players can wait in order to make a better informed decision. We allow for cohort effects, which arise endogenously in technology adoption problems with positive contemporaneous network effects. Formally, cohort effects lead to intra-period network effects being greater than inter-period network effects. Depending on the nature of the cohort effects, our game may or may not satisfy dynamic increasing differences. If it does, our model has a unique rationalizable outcome. Otherwise, multiple equilibria may exist as players want to invest at the same point in time others do. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Global game; Strategic waiting; Coordination; Strategic complementarities; Period-specific network effects; Equilibrium selection. (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (25)

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Working Paper: Equilibria in a Dynamic Global Game: The Role of Cohort Effects (2005)
Working Paper: Equilibria in a Dynamic Global Game: The role of cohort effects (2003)
Working Paper: Equilibria in a Dynamic Global Game: The Role of Cohort Effects (2003)
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DOI: 10.1007/s00199-005-0644-3

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