This paper develops a semiotic-inferential model of verbal communication for incomplete information games: a language is seen as a set of conventional signs that point to types, and the credibility of a message depends on the strategic context. Formally, there is an encoding-decoding step where...

When public goods can only be provided when donations cross a minimum threshold, this creates an advantage in that Pareto Efficient outcomes can be Nash Equilibria. Despite this, experiments have shown that groups struggle to coordinate on one of the many efficient equilibria. We apply a...

This chapter is a very compressed review of the neoclassical orthodoxy on the nature of rationality on economic theory. It defends the orthodoxy both against the behavioral criticism that it assumes too much and the revisionist view that it assumes too little. In places, especially on the...

Traditional game theory studies strategic interactions in which the agents make rational decisions. Evolutionary game theory differs in two key respects: the focus is on large populations of individuals who interact at random rather than on small numbers of players; and individuals are assumed...

This paper studies equilibrium selection via stochastic dynamics in the style of Young (Econometrica 61, 1993, 57-84), when the mistake probabilities are allowed to depend on their expected payoffs. Although any strict equilibrium can be selected with properly constructed state-dependent...

Coordination games often have multiple equilibria. The selection of equilibrium raises the question of belief formation: how do players generate beliefs about the behavior of other players? This article takes the view that the answer lies in history, that is, in the outcomes of similar...

We experimentally assess the predictive power of two equilibrium selection principles for binary N-player entry games with strategic complementarities. In static entry games, we test the theory of global games which posits that players play games of complete information as if they were playing a...

This paper studies the evolution of two clusters of firms competing on a common market. Firms exit and enter a cluster based on the perceived chances for profits inside and outside the cluster. Information about profits are diffused by direct communication between firms. Internal and external...

In a global game, larger ambiguity is shown to decrease the amount of coordination each player perceives. Consequently, small uncertainty tends to select the Pareto dominated equilibrium of the game without uncertainty. Implications for models of financial crises are drawn.