History as a Coordination Device

Rossella Argenziano and Itzhak Gilboa

No 275753, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: Coordination games often have multiple equilibria. The selection of equilibrium raises the question of belief formation: how do players generate beliefs about the behavior of other players? This paper takes the view that the answer lies in history, that is, in the outcomes of similar coordination games played in the past, possibly by other players. We analyze a simple model in which a large population plays a game that exhibits strategic complementarities. We assume a dynamic process that faces different populations with such games for randomly selected values of a parameter. We introduce a belief formation process that takes into account the history of similar games played in the past, not necessarily by the same population. We show that when history serves as a coordination device, the limit behavior depends on the way history unfolds, and cannot be determined from a-priori considerations.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 15
Date: 2010-10
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https://ageconsearch.umn.edu/record/275753/files/15-2011.pdf (application/pdf)

Related works:
Journal Article: History as a coordination device (2012)
Working Paper: History as a coordination device (2012)
Working Paper: History as a Coordination Device (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275753

DOI: 10.22004/ag.econ.275753

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