Dynamic coordination with timing frictions: theory and applications
Caio Machado () and
Ana Elisa Pereira ()
No 1726, Discussion Papers from Centre for Macroeconomics (CFM)
We start by presenting the general model of dynamic coordination with timing frictions and some key theoretical results. We prove the model features a unique rationalizable equilibrium, present a method to solve the social planner problem and derive expressions for the equilibrium threshold in limiting cases. With this toolkit in hand, we get analytical results for a case with linear preferences and present several applications, ranging from network externalities to statistical discrimination and to macroeconomics. Besides generating insights for speci c questions, the applications illustrate the potential of the model to accommodate a large set of economic problems. Last, we show extensions of the framework that allow for endogenous hazard rates, preemption motives and ex-ante heterogeneous agents.
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Working Paper: Dynamic coordination with timing frictions: theory and applications (2017)
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