Global Games With Strategic Substitutes

Abstract

We study global games with strategic substitutes. Specifically, for a class of binary‐action, N‐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 .

Panics and prices

“…This is because among the additional people who buy today are some who, if they had instead waited, would not buy in the second period either. 12 In other words, tomorrow's demand falls by less than one for one. As a result, tomorrow's supply falls by more than tomorrow's demand and so the price tomorrow rises.…”

“…For the moment, we do not require that buyers'decisions to be optimal. Some in C 1 may regret rushinig and some not in C 1 may regret waiting 12. Speci…cally, these are the people who redraw values in the second period, which happens with probability 1; and these values turn out to be low.…”

EPROACH: A Population Vaccination Game for Strategic Information Design to Enable Responsible COVID Reopening

“…Various settings have also been considered. For example, [9] studies equilibrium selection under arbitrary number of players; [10] has studied the setting of submodular games; [11], [12] have studied coordination under regime change. Our framework makes the extension to complex networks to allow richer types of players and patterns of interactions.…”

“…The equality (10) can be written as W (θ * ) = 0. To show the existence, we first note that W is continuously differentiable.…”