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 noiseindependent selection. Keywords equilibrium selection, global games, strategic complementaries, supermodular games Disciplines Growth and Development | International Economics | Other EconomicsComments 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) AbstractWe 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 (1993) 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.Journal of Economic Literature Classification Numbers: C72, D82.

Using only ordinal axioms, we characterize several multigroup school segregation indices: the Atkinson Indices for the class of school districts with a given fixed number of ethnic groups and the Mutual Information Index for the class of all districts. Properties of other school segregation indices are also discussed. In an empirical application, we document a weakening of the effect of ethnicity on school assignment from 1987/8 to 2007/8. We also show that segregation between districts within cities currently accounts for 33% of total segregation. Segregation between states, driven mainly by the distinct residential patterns of Hispanics, contributes another 32%. Properties of other school segregation indices are also discussed. In an empirical application, we document a weakening of the effect of ethnicity on school assignment from 1987/8 to 2007/8. We also show that segregation between districts within cities currently accounts for 33% of total segregation. Segregation between states, driven mainly by the distinct residental patterns of Hispanics, contributes another 32%. * Email addresses: dfrankel@iastate.edu; ovolij@bgu.ac.il. Volij thanks the Spanish Ministerio de Educación y Ciencia (project SEJ2006-05455) for research support. Measuring School Segregation

This paper shows that the phenomenon of multiple equilibria can be fragile to the introduction of aggregate shocks. We examine a standard dynamic model of sectoral choice with external increasing returns. Without shocks, the outcome is indeterminate: there are multiple rational expectations equilibria. We then introduce shocks in the form of a parameter that follows a Brownian motion and affects relative productivity in the two sectors. We assume that the parameter can reach values at which working in either sector becomes a dominant choice. A unique equilibrium emerges; for any path of the random parameter, there is a unique path that the economy must follow. There is no role for multiple, self-fulfilling prophecies or sunspots.

We study a coordination game with randomly changing payoffs and small frictions in changing actions. Using only backwards induction, we find that players must coordinate on the risk-dominant equilibrium. More precisely, a continuum of fully rational players are randomly matched to play a symmetric 2 = 2 game. The payoff matrix changes according to a random walk. Players observe these payoffs and the population distribution of actions as they evolve. The game has frictions: opportunities to change strategies arrive from independent random processes, so that the players are locked into their actions for some time. As the frictions disappear, each player ignores what the others are doing and switches at her first opportunity to the risk-dominant action. History dependence emerges in some cases when frictions remain positive.

A theory is developed that explains how stocks can crash without fundamental news and why crashes are more common than frenzies. A crash occurs via the interaction of rational and naive investors. Naive traders believe that prices follow a random walk with serially correlated volatility. Their expectations of future volatility are formed adaptively. When the market crashes, naive traders sell stock in response to the apparent increase in volatility. Since rational traders are risk averse as well, a lower price is needed to clear the market: The crash is a self‐fulfilling prophecy. Frenzies cannot occur in this model.