Dynamic coordination games

Douglas Gale

    Research output: Contribution to journalArticle

    Abstract

    Gains from coordination provide incentives for delay. In this paper, the extent of delay is studied in a dynamic, N-person, coordination game. There is no social gain from delay, so an equilibrium with delay is always inefficient. For fixed N, there is no coordination failure when the period length is short: all equilibrium outcomes converge to the Pareto efficient outcome as the period length converges to zero. On the other hand, holding period length fixed, there exist equilibria in which delay is proportional to N, for arbitrarily large values of N. In addition, it can be shown that the possibility of delay depends on the "timing" of strategic complementarities. However, under certain conditions, delay is shown to be a robust phenomenon, in the sense that "well-behaved" equilibria exhibit infinite delay for N sufficiently large.

    Original languageEnglish (US)
    Pages (from-to)1-18
    Number of pages18
    JournalEconomic Theory
    Volume5
    Issue number1
    DOIs
    StatePublished - Feb 1995

    Fingerprint

    Coordination games
    Pareto
    Incentives
    Strategic complementarity
    Coordination failure
    Infinite delay

    Keywords

    • Coordination
    • delay
    • dynamic games
    • strategic complementarities

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Dynamic coordination games. / Gale, Douglas.

    In: Economic Theory, Vol. 5, No. 1, 02.1995, p. 1-18.

    Research output: Contribution to journalArticle

    Gale, Douglas. / Dynamic coordination games. In: Economic Theory. 1995 ; Vol. 5, No. 1. pp. 1-18.
    @article{a25866086aa14cae8293a527e73a5e49,
    title = "Dynamic coordination games",
    abstract = "Gains from coordination provide incentives for delay. In this paper, the extent of delay is studied in a dynamic, N-person, coordination game. There is no social gain from delay, so an equilibrium with delay is always inefficient. For fixed N, there is no coordination failure when the period length is short: all equilibrium outcomes converge to the Pareto efficient outcome as the period length converges to zero. On the other hand, holding period length fixed, there exist equilibria in which delay is proportional to N, for arbitrarily large values of N. In addition, it can be shown that the possibility of delay depends on the {"}timing{"} of strategic complementarities. However, under certain conditions, delay is shown to be a robust phenomenon, in the sense that {"}well-behaved{"} equilibria exhibit infinite delay for N sufficiently large.",
    keywords = "Coordination, delay, dynamic games, strategic complementarities",
    author = "Douglas Gale",
    year = "1995",
    month = "2",
    doi = "10.1007/BF01213641",
    language = "English (US)",
    volume = "5",
    pages = "1--18",
    journal = "Economic Theory",
    issn = "0938-2259",
    publisher = "Springer New York",
    number = "1",

    }

    TY - JOUR

    T1 - Dynamic coordination games

    AU - Gale, Douglas

    PY - 1995/2

    Y1 - 1995/2

    N2 - Gains from coordination provide incentives for delay. In this paper, the extent of delay is studied in a dynamic, N-person, coordination game. There is no social gain from delay, so an equilibrium with delay is always inefficient. For fixed N, there is no coordination failure when the period length is short: all equilibrium outcomes converge to the Pareto efficient outcome as the period length converges to zero. On the other hand, holding period length fixed, there exist equilibria in which delay is proportional to N, for arbitrarily large values of N. In addition, it can be shown that the possibility of delay depends on the "timing" of strategic complementarities. However, under certain conditions, delay is shown to be a robust phenomenon, in the sense that "well-behaved" equilibria exhibit infinite delay for N sufficiently large.

    AB - Gains from coordination provide incentives for delay. In this paper, the extent of delay is studied in a dynamic, N-person, coordination game. There is no social gain from delay, so an equilibrium with delay is always inefficient. For fixed N, there is no coordination failure when the period length is short: all equilibrium outcomes converge to the Pareto efficient outcome as the period length converges to zero. On the other hand, holding period length fixed, there exist equilibria in which delay is proportional to N, for arbitrarily large values of N. In addition, it can be shown that the possibility of delay depends on the "timing" of strategic complementarities. However, under certain conditions, delay is shown to be a robust phenomenon, in the sense that "well-behaved" equilibria exhibit infinite delay for N sufficiently large.

    KW - Coordination

    KW - delay

    KW - dynamic games

    KW - strategic complementarities

    UR - http://www.scopus.com/inward/record.url?scp=33750018891&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=33750018891&partnerID=8YFLogxK

    U2 - 10.1007/BF01213641

    DO - 10.1007/BF01213641

    M3 - Article

    VL - 5

    SP - 1

    EP - 18

    JO - Economic Theory

    JF - Economic Theory

    SN - 0938-2259

    IS - 1

    ER -