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Monotone Global Games

Author

Listed:
  • Eric J. Hoffmann

    (Department of Accounting, Economics and Finance, West Texas A&M University)

  • Tarun Sabarwal

    (Department of Economics, The University of Kansas)

Abstract
We extend the global games method to finite player, finite action, monotone games. These games include games with strategic complements, games with strategic substitutes, and arbitrary combinations of the two. Our result is based on common order properties present in both strategic complements and substitutes, the notion of p-dominance, and the use of dominance solvability as the solution concept. In addition to being closer to the original arguments in Carlsson and van Damme (1993), our approach requires fewer additional assumptions. In particular, we require only one dominance region, and no assumptions on state monotonicity, or aggregative structure, or overlapping dominance regions. As expected, the p-dominance condition becomes more restrictive as the number of players increases. In cases where the probabilistic burden in belief formation may be reduced, the p-dominance condition may be relaxed as well. We present some examples that are not covered by existing results.

Suggested Citation

  • Eric J. Hoffmann & Tarun Sabarwal, 2018. "Monotone Global Games," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201903, University of Kansas, Department of Economics.
    • Handle: RePEc:kan:wpaper:201903
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    File URL: http://www2.ku.edu/~kuwpaper/2019Papers/201903.pdf
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    References listed on IDEAS

    as
    1. Frankel, David M. & Morris, Stephen & Pauzner, Ady, 2003. "Equilibrium selection in global games with strategic complementarities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 1-44, January.
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    7. Rodrigo Harrison, 2003. "Global Games with Strategic Substitutes," Working Papers gueconwpa~03-03-06, Georgetown University, Department of Economics.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Global games; strategic complements; strategic substitutes; monotone games; equilibrium selection;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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