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Dynamic coordination with timing frictions: theory and applications

Bernardo Guimaraes, Caio Machado () and Ana Elisa Pereira ()

No 1726, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: 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.

New Economics Papers: this item is included in nep-mic
Date: 2017-08
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