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Global games of regime change – coordination games of incomplete information in which a status quo is abandoned once a sufficiently large fraction of agents attacks it – have been used to study crises phenomena such as currency attacks, bank runs, debt crises, and political change. We extend...
Persistent link: https://www.econbiz.de/10008665284
Global games with endogenous information often exhibit multiple equilibria. In this paper we show how one can nevertheless identify useful predictions that are robust across all equilibria and that could not have been delivered in the common-knowledge counterparts of these games. Our analysis is...
Persistent link: https://www.econbiz.de/10009790364
Global games of regime change that is, coordination games of incomplete information in which a status quo is abandoned once a sufficiently large fraction of agents attacks it have been used to study crises phenomena such as currency attacks, bank runs, debt crises, and political change. We...
Persistent link: https://www.econbiz.de/10003779212
This paper examines the ability of a policy maker to control equilibrium outcomes in a global coordination game; applications include currency attacks, bank runs, and debt crises. A unique equilibrium is known to survive when the policy is exogenously fixed. We show that, by conveying...
Persistent link: https://www.econbiz.de/10003779286
games, beauty contests, and their applications. We elaborate on the distinct effects of strategic uncertainty relative to … fundamental uncertainty. We demonstrate the potential fragility of workhorse macroeconomic models to relaxations of common …
Persistent link: https://www.econbiz.de/10011573121
A theoretical model is adopted in order to explain incentives and actual safety behaviour for drivers, pedestrians and other road users which do not utilise motorised vehicles. A road user's outcome is supposed to be dependent on her individual actions and cares decided upon by other individuals...
Persistent link: https://www.econbiz.de/10001646561
Persistent link: https://www.econbiz.de/10010360296
In economics, the standard approach to language is that talk is cheap. Here, instead, language is a social convention that affects utility. Unless language is used in its ordinary sense, it cannot help to coordinate actions because there is no way of decoding it. This points to a unique...
Persistent link: https://www.econbiz.de/10008903436
In this paper we experimentally test a theory of boundedly rational behavior in a "lemons market." We analyzed two different market designs, for which perfect rationality implies complete and partial market collapse, respectively. Our empirical observations deviate substantially from these...
Persistent link: https://www.econbiz.de/10010506629
We consider a simple model that combines elements of search and social learning. Acting in sequence, and observing the action adopted by a previous agent, agents must search for an action. We explore why agent heterogeneity may increase expected payoffs and demonstrate that social learning may...
Persistent link: https://www.econbiz.de/10003491166