Preopening and Equilibrium Selection

Riccardo Calcagno and Stefano Lovo
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Riccardo Calcagno: VU University Amsterdam

No 10-023/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We introduce a form of pre-play communication that we call "preopening". During the preopening, players announce their tentative actions to be played in the underlying game. Announcements are made using a posting system which is subject to stochastic failures. Posted actions are publicly observable and players payoffs only depend on the opening outcome, i.e. the action profile that is posted at the end of the preopening phase. We show that when the posting failures hit players idiosyncratically all equilibria of the preopening game lead to the same opening outcome that corresponds to the most "sensible" pure Nash equilibrium of the underlying game. By contrast preopening does not operate an equilibrium selection when posting failure hits players simultaneously.

Keywords: Preopening; equilibrium selection; bargaining; cheap talk (search for similar items in EconPapers)
JEL-codes: C72 C73 C78 G1 (search for similar items in EconPapers)
Date: 2010-02-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Preopening and equilibrium selection (2010)
Working Paper: Preopening and Equilibrium Selection (2010)
Working Paper: Preopening and equilibrium selection (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20100023

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