TY - JOUR
T1 - GLOBAL GAMES WITH STRATEGIC SUBSTITUTES
AU - Harrison, Rodrigo
AU - Jara-Moroni, Pedro
N1 - Publisher Copyright:
© (2020) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
PY - 2021/2
Y1 - 2021/2
N2 - We study global games with strategic substitutes. Specifically, for a class of binary-action, (Formula presented.) -player games with strategic substitutes, we prove that under payoff asymmetry, as incomplete information vanishes, the global games approach selects a unique equilibrium. We characterize this equilibrium profile; players employ switching strategies at different cutoff signals, the order of which is directly determined by payoff asymmetry. We provide examples that illustrate our result and its connection with dominance solvability. We extend the global game literature, which has thus far been developed for games with strategic complementarities, to new applications in industrial organization, collective action problems, finance, etc.
AB - We study global games with strategic substitutes. Specifically, for a class of binary-action, (Formula presented.) -player games with strategic substitutes, we prove that under payoff asymmetry, as incomplete information vanishes, the global games approach selects a unique equilibrium. We characterize this equilibrium profile; players employ switching strategies at different cutoff signals, the order of which is directly determined by payoff asymmetry. We provide examples that illustrate our result and its connection with dominance solvability. We extend the global game literature, which has thus far been developed for games with strategic complementarities, to new applications in industrial organization, collective action problems, finance, etc.
UR - http://www.scopus.com/inward/record.url?scp=85091006548&partnerID=8YFLogxK
U2 - 10.1111/iere.12481
DO - 10.1111/iere.12481
M3 - Article
AN - SCOPUS:85091006548
SN - 0020-6598
VL - 62
SP - 141
EP - 173
JO - International Economic Review
JF - International Economic Review
IS - 1
ER -