The effect of options on coordination

Bernardo Guimaraes and Luis Araujo ()

No 474, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: In some coordination problems, an agent's payoff depends on what other agents will do in the future. This paper studies how constraints on the timing of actions affect equilbrium in those problems. While the possibility of waiting longer for others' actions helps agents to coordinate in the good equilibrium, the option of delaying one's actions harms coordination. In a symmetric case, the risk-dominant equilibrium of the corresponding one-shot game is selected.

Date: 2012
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Related works:
Working Paper: The effect of options on coordination (2013)
Working Paper: The effect of options on coordination (2013)
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