Pre-communication in a coordination game with incomplete information

Zhuozheng Li (), Huanxing Yang () and Lan Zhang
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Zhuozheng Li: Shanghai University of Finance and Economics
Huanxing Yang: Ohio State University
Lan Zhang: Southwestern University of Finance and Economics

International Journal of Game Theory, 2019, vol. 48, issue 1, No 5, 109-141

Abstract: Abstract We study several pre-communication protocols in a coordination game with incomplete information. Under decentralized decision making, we show that informative communication can be sustained in equilibrium, yet miscoordination arises with positive probabilities. Moreover, the equilibrium takes a partitional structure and messages are rank ordered, with higher messages becoming increasingly imprecise. Compared to centralized decision making (a mediator without commitment), decentralization leads to more informative communication when the miscoordination cost is high, and performs better when the miscoordination cost is intermediate. We also study the case in which the mediator is able to commit to a decision rule beforehand.

Keywords: Cheap talk; Coordination game; Centralization; Decentralization (search for similar items in EconPapers)
JEL-codes: D23 D74 D82 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00182-018-0637-7

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