Equilibrium Selection in Global Games with Strategic Complementarities

TitleEquilibrium Selection in Global Games with Strategic Complementarities
Publication TypeJournal Article
Year of Publication2003
AuthorsFrankel DM, Morris S, Pauzner A
JournalJournal of Economic Theory
Pagination - 44
Date PublishedJanuary 2003
ISBN Number0022-0531, 0022-0531
KeywordsGames, Noncooperative Games (C72), Two Player
AbstractWe study games with strategic complementarities, arbitrary numbers of players and actions, and slightly noisy payoff signals. We prove limit uniqueness: as the signal noise vanishes, the game has a unique strategy profile that survives iterative dominance. This generalizes a result of Carlsson and van Damme (Econometrica 61 (1993) 989-1018) for two-player, two-action games. The surviving profile, however, may depend on fine details of the structure of the noise. We provide sufficient conditions on payoffs for there to be noise-independent selection.