[PDF][PDF] The effect of correlated inertia on coordination

Y Ishii, Y Kamada - Unpublished manusscript, 2011 - dev.gtcenter.org
Unpublished manusscript, 2011dev.gtcenter.org
We study how the structure of moves influences equilibrium predictions in the context of
revision games, as termed by Kamada and Kandori (2009). In our variant of revision games,
two players prepare their actions at times that arrive stochastically before playing a
coordination game at a predetermined deadline, at which time the finallyrevised actions are
implemented. The revisions are either synchronous or asynchronous. The coordination
game we study is a 2× 2 game with two strict Pareto-ranked Nash equilibria. We identify the …
Abstract
We study how the structure of moves influences equilibrium predictions in the context of revision games, as termed by Kamada and Kandori (2009). In our variant of revision games, two players prepare their actions at times that arrive stochastically before playing a coordination game at a predetermined deadline, at which time the finallyrevised actions are implemented. The revisions are either synchronous or asynchronous. The coordination game we study is a 2× 2 game with two strict Pareto-ranked Nash equilibria. We identify the condition under which the Pareto-superior payoff profile is the unique outcome of the dynamic game. Specifically, we find that uniqueness of this outcome is more easily obtained when the degree of asynchronicity is sufficiently high relative to the risk of taking the action corresponding to the Pareto-superior profile. We further show that when this degree is low the set of payoffs attainable in equilibria expands considerably.
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