Observing actions in global games

Dominik Grafenhofer () and Wolfgang Kuhle ()
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Dominik Grafenhofer: Deutsche Telekom
Wolfgang Kuhle: Corvinus University

SN Business & Economics, 2022, vol. 2, issue 12, 1-15

Abstract: Abstract We study Bayesian coordination games where agents receive noisy private information over the game’s payoffs, and over each others’ actions. If private information over actions is of low quality, equilibrium uniqueness obtains in a manner similar to a global games setting. On the contrary, if private information over actions (and thus over the game’s payoff coefficient) is precise, agents can coordinate on multiple equilibria. We argue that our results apply to phenomena such as bank-runs, currency crises, recessions, or riots and revolutions, where agents monitor each other closely.

Keywords: Coordination games; Global games; Conjectural equilibrium (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s43546-022-00362-8

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