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Equilibrium Selection in Global Games with Strategic Complementarities
Journal of Economic Theory
  • David M. Frankel, Iowa State University
  • Stephen Morris, Yale University
  • Ady Pauzner, Tel Aviv University
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We 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.


NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Economic Theory. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Economic Theory, [108, 1, (2003)] DOI: 10.1016/S0022-0531(02)00018-2

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Elsevier Ltd.
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David M. Frankel, Stephen Morris and Ady Pauzner. "Equilibrium Selection in Global Games with Strategic Complementarities" Journal of Economic Theory Vol. 108 Iss. 1 (2003) p. 1 - 44
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